Beautiful Alberta! They probably weren’t thinking about taxes when they chose the motto “strong and free”. Alberta isn’t tax-free, but if you’re up to date on the latest tax rates and most popular credits, deductions and programs, you might feel less of a tax burden come tax time.
Alberta has a tax system similar to other Canadian provinces. Many of the Alberta provincial taxes and credits compliment similar credits at the federal level, but there are some unique credits for residents of Alberta.
Alberta’s Personal Income Tax Brackets for Tax Year 2020
Taxable Annual Income
|10%||on the first $131,220||$131,220|
|12%||on the next $26,244||over $131,220 up to $157,464|
|13%||on the next $52,488||over $157,464 up to $209,952|
|14%||on the next $104,976||over $209,952 up to $314,928|
|15%||on the portion over $314,928||over $314,928|
How Alberta’s Tax Brackets Work
A tax bracket is the tax rate applicable to a set range of income.
Alberta’s tax system is similar to most other Canadian provinces and largely mirrors the tax structure at the federal level. Alberta also has some province-specific credits. First, let’s take a closer look at how taxes and tax brackets in Alberta work.
As with most provinces, Alberta uses a progressive tax structure. The tax brackets increase each year, based on inflation. More information can be found in this link: Alberta Treasury Board and Finance – Personal Income Tax.
Alberta Provincial Tax Credits
- A complete list of Non-Refundable Tax Credits and other credits or deductions for Alberta residents can be found in this CRA link: Alberta Tax and Credits.
- Alberta Child and Family Benefit (ACFB): In July 2020, the Alberta Family Employment Tax Credit (AFETC) and Alberta Child Benefit (ACB) were combined into one credit. This benefit is a non-taxable amount paid to lower-income families with children under 18 years of age. The quarterly amounts are issued separately from the Canada Child Benefit (CCB) in August, November, February, and May. More information is available in this link: Govt of Alberta: Alberta Child and Family Benefit (ACFB).
How is the Tax Rate Structure in Alberta Determined?
The Government of Alberta uses a progressive structure to calculate tax brackets in Alberta. The tax rates in Alberta range from 10 percent to 15 percent of income. Therefore, your income tax rates are determined by how much income you made during the year. Tax brackets in Alberta are not static; meaning they can change from year to year.
What Is Used To Calculate the Tax Rates in Alberta?
Income for determining your tax bracket is calculated by adding the sum of all income streams for the year, such as employment, self-employment, pension, saving plans, investments, benefits, and more totalled on Line 15000 – Total Income, then subtracting applicable credits and deductions. The result of this calculation shown on Line 26000 – Taxable Income and used to determine your tax brackets.
There is an allowable amount of income that you can earn before you must start paying taxes. That is called the “basic personal” or “personal amount.” For the 2020 tax year, the Federal basic personal amount is $13,229, while the Alberta basic personal amount is $19,369. Alberta has the highest basic personal amount in Canada.
This TurboTax article provides more information on the federal tax rates, as well as links to other provinces and tax calculators: An Overview of Canada’s Tax Brackets.
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