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Canada’s 2024 Tax Brackets and Rates: Here’s What You Need to Know
27 Feb, 2024Canada's 2024 Tax Brackets and Rates: Here’s What You Need to Know
Tax season's rolling in, and you know what that means – the annual update to Canada's tax brackets and rates. Staying in the loop on these updates will help you make the best of accounting services in Canada. Just a quick heads-up – tax brackets are adjusted every year as per the inflation, making sure we keep up with the ever-changing cost of living. This year also, the tax brackets have been indexed by 4.7%, meaning they've risen to accommodate inflation. The good news? After the 2024 tax bracket changes, more income is falling into lower tax brackets, potentially leading to lower taxes for many Canadians. So, how will the new changes impact you? This article is here to help you find out. Before you read further: Don’t forget to book your first consultation with Chartered professional accountants at CJCPA for free.WHAT IS A TAX BRACKET?
People don't pay taxes on their entire income at one rate. Instead, the income is divided into different levels called tax brackets, and each bracket has its own tax rate. So your money goes through these levels, not sticking to just one rate. Tax brackets are like tiers of income, and higher rates apply as your income goes up. These tax brackets get adjusted each year based on the consumer price index, and the rates represent the percentage of income that goes to regional and federal governments. These tax rates apply to the taxable income. It is the figure that arrives after the original income goes through deductions, credits, and exemptions. In Canada, there is a marginal tax rate system, meaning that the more you earn, the higher the income tax rate. The federal government sets the federal income tax rates, but each province and territory can decide their own rates. These provincial and territorial rates are added on top of the federal amounts.Key Tax Brackets (2024 vs. 2023)
Below are the 2024 federal income tax rates, compared with rates for 2023 as well. These rates will apply to your taxable income, which is the income left post deductions, credits, and exemptions. If you don’t want to miss on the the tax credits, deductions, and benefits available, consult Tax Accountant Surrey for a professional opinion.Federal Tax Rate | Tax Brackets | |
2024 | 2023 | |
15% | $55,867 or less | $53,359 or less |
20.5% | $55,868 - $99,849 | $51,909 - $93,572 |
26% | $99,849 - $156,497 | $93,572 - $149,438 |
30% | $156,497 - $221,758 | $149,438 - $216,511 |
33% | Over $221,758 | from $216,511 |