The federal government has changed
the tax bracket for the 2023 tax year since inflation has been strong over the
last year. Since the 2022 levels for each bracket were raised, taxpayers will
pay a less percentage of their yearly income on average.
1. In 2023: The tax rate on income up to $53,359 is 15%.
The tax rate on income between $53,359 to $106,716 is 20.5%.
The tax rate on income between $106,717 to $165,430 is 26%.
The tax rate on income from $165,430 to $235,675 is 29%.
The tax rate on any income beyond $235,675 is 33%.
Take note that the federal tax brackets for 2023 are as follows. It’s also important
to be aware of provincial tax brackets.
2. An increase in the EI premium rate:The rate of premiums for employment insurance
will rise on January 2, 2024. The Canada Employment Insurance Commission
determines the annual EI premium rate based on a seven-year predicted
break-even rate. The rate of insurance premiums for workers is now $1.66 per
$100 of earnings for 2024, up from $1.63, and for employers it is now $2.32 per
$100 of earnings, up from $2.28.
3. A new alternative minimum tax rate :The purpose of the alternative minimum tax is
to guarantee that affluent taxpayers pay a minimal amount of taxation even when
their income comes from sources that are exempt from taxes or when they get
credits, deductions, or special treatment.
At the moment, there is a $40,000 exemption from the 15% AMT. The 2023 budget’s
proposed modifications would raise the rate to 20.5% with a $173,000 exception.
Should it be approved, the increased AMT rate would apply to subsequent tax
years and take effect on January 1, 2024.
4. Basic Personal Amount increase:The BPA is the amount of money an individual can earn in Canada without incurring
federal income tax. The Government of Canada announced in 2019 that the federal
BPA would be increased each year until it reaches $15,000 in 2023. After that,
the BPA will increase on an inflation-indexed basis. The federal BPA is
currently $15,705 for 2024. If your annual income is $15,000 or less, then you
will not be subject to the BPA increase. High income individuals will not
receive the full increase in BPA, as there is an income test. The enhancement
will be lower for higher tax brackets. Individuals in the top tax bracket will continue
to receive the old BPA, which is currently $14,156 in 2024. There are also
different provincial BPAs depending on the province or territory.

5. The Government of Canada eliminated the flat-rate deduction for home office expenses in response to the coronavirus pandemic:The flat-rate deduction was made
available to remote workers in the 2020 tax year, 2021 tax year, and 2022 tax
year. The Canada Revenue Agency (CRA) announced in December that the flat-rate
deductions for home office expenses will not be available in 2023 or later.
6. The Tax-Free Savings Account (TFSA) dollar limit has increased again:the TFSA contribution limit is now $7,000 for 2023 and $6,500 for 2024. You can contribute to a TFSA starting at age 18 and can carry forward unused TFSA contributions from previous years.
7. Increase the RRSP limit: Contribution limits for registered pension plans have been increased to $30,780 for the 2023 tax year, an increase of $1,570 from the previous year.Note that the amount of your individual contributions to your RRSP is always capped at 18% of your total income and you will be penalized if you exceed these limits.
