Danielle Kubes is a trained journalist and investor who has written about personal finance for the past six years. Her writing has been published in The Globe and Mail, National Post, MoneySense, Vice and RateHub.ca. Danielle writes about investing and personal finance for Wealthsimple. She has a Bachelor of Humanities from Carleton University and a Master of Journalism from Ryerson University.
Billionaires probably aren’t big fans of this, but Canada uses a progressive tax system, which means someone’s tax rate increases the more money they earn. The progressive tax system is true for both federal and provincial/territorial taxes, which each have their own unique tax brackets (they’re just keeping the ol’ tax code fun). Income tax in Canada is based on your taxable income, which is your total gross income from all sources, minus eligible deductions.
Provincial/territorial taxes are based on your province or territory of residence as of December 31. For example, if you’re filing 2023 taxes and you lived in Ontario to start the year before moving to Alberta in November, you’ll be subject to Alberta income tax (in addition to federal taxes everyone in Canada pays).
|2023 Alberta income tax brackets||2023 Alberta income tax rates|
|$142,292 or less||10%|
|$142,292 to $170,751||12%|
|$170,751 to $227,668||13%|
|$227,668 to $341,502||14%|
|More than $341,502||15%|
What are Canada's federal 2023 tax brackets and Rates?
The following are the federal tax rates for tax year 2023 according to the Canada Revenue Agency (CRA):
|2023 federal income tax brackets||2023 federal income tax rates|
|$53,359 or less||15%|
|$53,359.01 to $106,717||20.5%|
|$106,717.01 to $165,430||26%|
|$165,430.01 to $235,675||29%|
|More than $235,675.01||33%|
How do I calculate income tax in Alberta?
It just takes some simple math to calculate your marginal tax rate (the total amount of federal and provincial/territorial taxes you owe), so stay with us. For example, if your taxable income after deductions and exemptions was $45,000, you owe 15% of that for your federal tax, and the Alberta provincial amount you owe is 10%, then your marginal tax rate (15% + 10%) is 25%.
If you want to get a rough estimate of how much income tax you owe on your taxable income, first calculate your federal income tax, then calculate your provincial tax, and, finally, add the amounts together.
To follow the example where your taxable income was $45,000 and you didn’t have any deductions or credits, your calculation would be:
$45,000 x 15% = $6,750 (federal taxes)
$45,000 x 10% = $4,500 (Alberta provincial taxes)
Total income tax: $6,750 + $4,500 = $11,250
One confusing detail to note: in a progressive tax system, your income tax payable is cumulative. That means that depending on what tax bracket your taxable income falls in, you could be paying multiple rates of tax.
To see this in action, let’s say you have a taxable income of $60,000. Here’s how you would figure out your taxes:
Calculating the federal tax bill Based on the updated 2023 federal tax rates, the first $53,359 of your income is taxed at 15%, which works out to $8,003.85. Taking your total income ($60,000) and subtracting the first income tax bracket ($53,359), you have $6,641 of unaccounted-for income remaining. That amount will be taxed at a higher rate of 20.5%, which is $1,361.41. This means the total you owe in federal tax is $8,003.85 + $1,361.41, so $9,365.26.
Calculating the provincial tax bill As a resident of Alberta, to find your provincial tax, you’d be required to pay 10% tax on $60,000 in income, since it is still within the first Alberta tax bracket of $142,292. So, your total Alberta taxes would be $6,000.
Calculating the total tax bill To get the marginal tax, the combined federal and provincial taxes you owe, add what you owe federally ($9,365.26) and what you owe to Alberta ($6,000), for a total of $15,365.26.
What a deal for getting to live in Alberta!
How can I reduce my taxes in Alberta?
Check out these ways to cut down on how much tax you’ll owe as an Alberta resident through deductions or credits (note: asking nicely to pay less doesn’t work; we’ve tried).
Finally, a word we love to hear whether we’re spending on trousers or taxes: discounts! The most common federal nonrefundable tax credits are things like the basic personal amount, medical expenses, and charitable or political donations. Most taxpayers in Canada are eligible to claim the federal basic personal amount of $15,000 on their 2023 taxes, which reduces taxable income, if their net income is $165,430 or less. (If your net income is $235,675 or more, that personal amount is reduced to $13,520.) In Alberta, you are also eligible to claim a provincial basic personal amount of $21,003. There are additional credits for seniors, for people who have a qualifying disability, or for those caring for a person with a disability.
Also, if your income is less than $15,000 for 2023, you shouldn’t have to pay any income tax. You should still file your taxes, though. All kinds of federal and provincial/territorial programs, such as the GST/HST credit, are based on your income as reported on your income tax return.
Nonrefundable tax credits reduce the amount of tax you have to pay, but you are only eligible to claim them if you owe taxes. In other words, you need to have earned some kind of income. For nonrefundable tax credits, you can claim only as much as would reduce your taxes to zero, but you don’t get the excess as a refund.
So, if you owe $4,000 in taxes, and you have $4,500 in nonrefundable tax credits, you can claim $4,000, but you don’t get $500 as a refund. In some circumstances, such as unused tax credits for tuition, your student loan interest and donations can be carried forward for future years.
To check if there are other tax credits you may be eligible for, have a look here or call the CRA at 1-800-959-8281.
A deduction reduces your taxable income, lowering the amount of income you will be taxed on. The CRA provides detailed information on both federal and province-/territory-specific deductions. Deductions exist for Canadian Armed Forces personnel and police members, Registered Pension Plan holders, Registered Retirement Savings Plan contributors, and more. There may be others that you qualify for. Check this list or call the CRA at 1-800-959-8281.
Frequently asked questions
Alberta tax brackets are combined with federal brackets to determine the total amount of income tax you owe to the Canada Revenue Agency (CRA).
Yes, Alberta tax brackets are incremental, and the more you earn, the more you pay. However, everyone earning $142,292 or less pays the same amount: 10%.
Yes, the rate of tax increases as the amount of income increases.
Alberta tax is paid along with your federal tax, which has historically been due April 30 in the calendar year following the tax year you are filing. If the date falls on a Saturday or Sunday, your return will be considered filed on time if the CRA receives it, or even if it is postmarked, on or before the next business day.
If you or your spouse or common-law partner are self-employed, you have until June 15 to file on time. Again, if this date falls on a weekend, the deadline moves to the next business day.
For all you procrastinators out there: don’t! Filing your return long before the deadline means (1) you don’t have to rush and (2) you’ll receive any refund you’re entitled to sooner, aka cash in your pocket sooner and less stress.
File with Wealthsimple Tax. Maximum refund, guaranteed.Get started for free