Indexing the personal income tax system will save taxpayers an estimated $55 million in 2016 and a further $70 million in 2017.

Alberta’s personal income tax system is adjusted annually with inflation, ensuring the value of Albertans’ tax credits is not eroded over time and that taxpayers are not pushed into higher brackets by inflation.
 
As Albertans file their 2016 tax returns, they will notice their tax credit amounts were increased by 1.3 per cent, raising their basic personal and spousal amounts from $18,214 to $18,451 for 2016.
 
In 2017, Albertans will see these amounts— already the highest in Canada—increase by another 1.3 per cent to $18,690.
 
“Alberta’s exemption amounts and tax credits mean a typical family of four can earn up to $51,196 this year before paying any provincial income tax," said Minister of Finance, Joe Ceci. "That’s more money in every family’s pocket and is an example of how our government is working to make life affordable for Albertans.”
 
With the highest basic personal and spousal amounts, no sales tax and no payroll tax, Albertans benefit from the lowest overall taxes among the provinces.
 
This chart, courtesy Finance Alberta, helps explain the tax differences between 2016 and 2017. The chart assumes tax amounts include the Alberta Child Benefit and Alberta Family Employment Tax Credit.  For two income families, income and RRSP/RPP contributions are split 60/40 between the two spouses. RRSP/RPP contributions are, respectively, $0, $6,000, $10,000 and $25,000. Children in the chart are assumed to be six and 12 years-old.

 

 

2016

2017

Employment Income of $35,000 for one income family with two children

     Provincial income tax

(1,774)

(2,147)

Employment income of $75,000 for one income family with two children

     Provincial income tax

2,683

2,455

Employment income of $100,000 for two income family with two children

     Provincial income tax

4,776

4,676

Employment income of $200,000 for two income family with two children

     Provincial income tax

13,182

13,082

 

For the 2016 tax year, a one-income couple earning $75,000 with two children in Alberta will pay $3,555 less in total provincial taxes than they would in British Columbia and $1,380 less than they would in Saskatchewan.
 
In 2017, the same couple will pay $4,094 (BC) and $1,825 (SK) less in total provincial taxes, respectively.
 
Indexation of Alberta's personal income tax system is based on the year-over-year change in the Alberta Consumer Price Index for the 12-month period that ends September 30.

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