According to the Canadian Taxpayers Federation(CTF), almost all Canadians will pay higher federal income tax rates in 2024. The federally not-for-profit citizen’s group released its annual report citing the varied Canada tax changes in 2024 like the rising payroll, alcohol and carbon taxes, along with a second Canada Pension Plan tax.
The Government of Canada works zealously in various aspects for the growth and development of the country. The ecosystem of the government is focused towards the collection of taxes from the public and launching social welfare programs. Various social welfare schemes like the Ontario grocery rebate and CPP benefits are offered by the government to provide relief to the citizens.
The Canadian government is going to introduce an income tax increase in 2024 as per which the tax rate for different categories will be changed. It is crucial to know about the new Canada tax brackets 2024 that are being introduced and all the citizens will have to pay their taxes accordingly from 2024.
Expected Canada Tax Changes in 2024
There are several changes to the new tax in Canada for the year 2024. We have highlighted some major points below-
- New federal tax brackets will be noted at the rising inflation and a higher cost of living over the past year. These new tax brackets will adjust and increase the threshold for citizens with a lower amount and annual income.
- Alternative Minimum Taxation(AMT) rates were implemented to ensure that high-income individuals with a minimum amount of taxes were subjected to tax exemptions and credit benefits. Currently, the AMT is applicable at a rate of 15% on a 40K CAD exemption. From 2024, the AMT will affect future taxation years.
- Employment Insurance Premium rates will also increase for the year 2024. The rate will be set at $1.66 per 100 CAD earnings and can go up from $2.32.
- The basic personal amount will also increase without paying federal income tax. The BPA for 2024 is set at 15,750 CAD on the annual income equal to this sum. Moreover, the BPA will also vary from province to province.
- The RRSP and TFSA dollar limit will also increase according to the contribution. The registered retirement savings plan assistance will rise by $1,570. The tax-free savings contribution will rise to 7000 CAD.
Income Tax Increase in Canada 2024
The New Canada Tax Brackets are introduced for all taxpayers by the Canadian government. It is important to check your annual income and check the bracket under which you fall after exemptions.
As per the new income tax increase in Canada, every taxpayer will have to pay taxes between 15% to 33% depending on their annual income.
Tax Brackets in Canada 2024
| New Tax Brackets | Tax Rate |
| Up to $53,359 | 15% |
| $53,359 to $106,716 | 20.5% |
| $106,716 to $165,430 | 26% |
| $165,430 To $235,675 | 29% |
| $235,675 or Above | 33% |
These changes are expected to be implemented in the upcoming tax-paying sessions. However, it would be wise to wait for the budget to be announced to confirm the new income tax increase.
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Federal Income Tax Changes in 2024
Canada Pension Plan
The maximum pensionable earnings subject to the Canada Pension Plan will increase in 2024, resulting in higher CPP contributions for both the employee and employer. They will each pay $3867 for earnings of $68,500 or more, indicating an increase of $113 from the previous year.
Moreover, a new CPP2 tax will be introduced and applied to earnings between $68,500 to $73,200, with a maximum tax amount of $188. For individuals earning above $73,200, the total CPP contribution will rise to $4,055, an increase of $301.
Employment Insurance
The Employment Insurance Tax and Minimum Insurable earnings will also increase in 2024. Employees will pay $1049 and employers $1469 for Employment insurance, for those earning $63,200 or more. This indicates a rise of $47 for employees and $66 for employers.
Since 2018, the Employment Insurance tax has risen by $191 for employees and $267 for employers. The total federal payroll taxes(CPP and EI) will be $5,104 for workers earning $73,200 or above.
Overall, Canadians earning $30,000 to $200,000 will see income tax increases ranging from $9 to $347.
Carbon Tax
The federal carbon tax in Canada will rise from $65 to $80 per tonne in 2024. This means a higher cost for fueling vehicles. Except for Quebec, most provinces and territories are subjected to this rate increase.
The government suggests a net benefit for families with rebates but a report by the Parliamentary Budget Officer shows that the carbon tax will cost the average household between $377 to $911, even after rebates.
The second carbon tax, introduced last year, is expected to increase the prices of gas by up to 17 cents per litre.
Home Heating Oil Carbon Tax Exemption
Canadians using furnace oil to heat their homes received some relief last year when it was announced they would be exempted from carbon tax for three years. Households using furnace oil for home heating will save up to 17 cents per litre until April 2024, and 21 cents per litre afterwards.
According to CTF, only 3% of Canadian homes use furnace oil.
Alcohol Taxes
Starting April 1, 2024, Canadians will pay more for liquor, beer, wine, and spirits. The alcohol escalator tax will increase taxes in line with inflation. The alcohol tax will see an increase of 4.7% rise in federal tax on alcoholic beverages, resulting in an estimated additional cost of about $100 million to taxpayers in 2024-25.
Digital Services Tax
Introduced last November, the Digital Services Tax is aimed at large online companies that host marketplaces and social media platforms like Google and Amazon. A previous PBO estimate found that DST will cost taxpayers $1.2 billion in 2024, however, this revenue estimate largely depends on when the tax will be implemented.
Consumers should also expect to pay higher prices due to DST if history is any indication.
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How to Check Your Tax Bracket in 2024?
- You can check the Income tax increase in Canada from the official Canadian government website.
- Visit canada.ca and click on CRA Account login.
- Login to your CRA account using your credentials.
- Click on New Tax Changes in Canada 2024.
- On this page, you can find the changes in Tax Rebates, Rates and Benefits.
