New Personal Income Tax Rates in New Brunswick
With its 2016 budget, New Brunswick announced changes to personal income tax rates. Retroactive to
Jan. 1, 2016, the changes eliminate the province’s top tax bracket from 2015 and lower the rates on the new top bracket. Additionally, taxpayers may experience corresponding taxation changes to income received from dividends.
2016 Personal Income Tax Rates in New Brunswick
For tax year 2016, residents of New Brunswick face the following income tax brackets and rates:
- 9.68% on taxable income up to $40,492
- 14.82% on taxable income over $40,492 and up to $80,985
- 16.52% on taxable income over $80,985 and up to $131,664
- 17.84% on taxable income over $131,664 and up to $150,000
- 20.3% on taxable income over $150,000
In other words, this means you must pay 9.68% tax on the first $40,492 of taxable income, 14.82% on
the next $40,493, 16.52% on the next $50,679, 17.84% on the next $18,336, and 20.3% on any amounts over $150,000.
Effective Date of 2016 Tax Brackets
New Brunswick did not announce changes to the province’s personal income tax rates until the middle
of 2016. However, the government decided to apply the new rates retroactively as of Jan. 1, 2016. The new rates only affect you if you have over $150,000 in taxable income. If you fall into this category, your employer likely withheld additional income tax from your paycheque before the new rates were introduced. As a result, when you file your tax return, you may receive a refund. However, that varies depending on your other sources of income, deductions, credits, and multiple other factors.
2015 Personal Income Tax Rates in New Brunswick
In 2015, New Brunswick instituted a temporary sixth income tax bracket. This bracket affected taxable income over $250,000 at a rate of 25.75%. Below that, the fifth bracket included income from $150,000 to $250,000, taxed at a rate of 21%. As explained above, these tax rates have been lowered or eliminated.
The other four tax brackets all had the same income tax rates in 2015 as in 2016. However, the income guidelines for each bracket were slightly different.
- 9.68% on taxable income up to $39,973
- 14.82% on taxable income from $39,973 to $79,976
- 16.52% on taxable income from $79,976 to $129,975
- 17.84% on taxable income from $129,975 to $150,000
Federal Income Tax Rates
In addition to paying provincial income tax, residents of New Brunswick also face federal income tax. As
of 2016, the Canada Revenue Agency uses the following tax brackets and rates:
- 15% on taxable income up to $45,282
- 20.5% on taxable income over $45,282 and up to $90,563
- 26% on taxable income over $90,563 and up to $140,388
- 29% on taxable income over $140,388 and up to $200,000
- 33% on taxable income over $200,000
All of the numbers quoted in the above tax tables refer to taxable income. Taxable income is not the
amount of wages you receive from your employer or the amount of self-employment income you earn. Instead, your wages or self-employment income are your gross income. When you file your income tax return, you are allowed to take a range of deductions, and your taxable income is your gross income minus those deductions.
To illustrate, imagine you earn $60,000 per year. As a resident of New Brunswick, you receive a $9,758 personal amount. When you subtract this amount from your gross income, the difference is $50,242. If you don’t qualify for any other tax credits or amounts, this is your taxable income. (Note that most people qualify for multiple deductions. This is just a simple example to illustrate the concept of taxable income.)
Your provincial and federal taxable incomes may be different. For example, as of 2015, the CRA offers a basic personal amount of $11,327. If your gross income is $60,000 and you have no other deductions, your federal taxable income is $48,673. In this case, your federal taxable income is less than your provincial taxable income.
Dividend Taxation in New Brunswick
As of 2016, the top federal income tax rate is four percentage points higher than it was in 2015. This
affects tax on income as well as tax on dividends, and residents of New Brunswick who pay the top tax rate face a 43.79% tax on eligible dividends and a 51.75% tax on noneligible dividends. These rates combine the federal and provincial tax on dividends, and represent an increase over the previous year. In 2015, the top tax rate in New Brunswick was only a 38.27% tax on eligible dividends and 46.89% on noneligible dividends.