When considering the best Canadian province to stay in, Alberta may not be at the top of most people’s lists. But one thing that Alberta government officials often talk about is its “tax advantage” over other provinces; add up all the different types of taxation from all three levels of government, and Albertans generally have the smallest tab to pick up.
But there’s an exception when it comes to income tax. A new report by CBC News looks at the income taxes — including both the high-income surtax and the health premiums charged in Ontario as part of the income-tax system — paid at different income levels across different provinces.
“Alberta's basic personal tax credit now stands at $18,915, meaning Albertans effectively pay no income tax to the provincial government on income up to that level,” wrote CBC News reporter Robson Fletcher. “That makes Alberta the best province, from an income-tax point of view, to be living on low income.”
Looking at the tax rates for the bottom income brackets, the rates in Ontario and BC are actually lower (5.05% and 5.06%, respectively). But the exemptions the two provinces offer are only about half of that in Alberta.
Focusing on high-income earners, Alberta currently has a progressive tax system. Most residents pay a 10% income tax rate, but those earning more than $128,145 per year also pay 12% on their earnings above that threshold; the tax rate tops out at 15% on income above $307,547. But even with that system in place, the highest-income Albertans pay the lowest income taxes in the country.
“It's Albertans in the middle who don't fare as well,” Fletcher wrote. “While Albertans making $25,000 a year pay the least income tax in the country, the picture changes as you approach $50,000.”
At the $50,000 annual income level, Albertans pay around $600 more in tax than British Columbians, and around $60 more than Ontarians. The gap widens at the $75,000 mark, with Albertans paying around $100 and $1,200 more than Ontarians and British Columbians, respectively.
“Around $100,000, Albertans pay less than Ontarians but still more than people in BC,” Fletcher said. “It's around the $150,000 mark that Alberta returns to the lowest income-tax burden of all provinces.”
Looking at 2015 figures from Statistics Canada, Fletcher found that 1.9 million Albertans — the bulk of the adult, tax-filing population in the province — fell somewhere between $25,000 and $150,000. Around 178,000 reported individual incomes of $150,000 or more, while 950,000 reported less than $25,000 in income.
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