The majority of Canadians will wake Jan. 1 to a new year and a lower tax bill.
With the Liberals’ promised re-jigging of income tax rates coming into effect on Friday, millions of Canadians will get a break when they file their annual income taxes for 2016, experts say.
The Canadian Taxpayers Federation crunched the numbers this week and released its projections on how much individual earners will pay in tax this upcoming year versus 2015.
The projections are an all-in look that take into account provincial taxes and obligations such as Canada Pension Plan contributions and employment insurance premiums.
When it’s all said a done, most are walking away with a bit more money in their pocket (see below).
“The Trudeau government’s middle-income tax cut means more money for most Canadians,” the non-profit tax watchdog group said.
But there are exceptions – notably those in the lowest income brackets. While taxes were expected to rise for high earners under the new government’s reforms, individuals with income of $30,000 or less also face an uptick based on the CTF’s calculations, albeit a modest one.
It also seems individuals earning between $80,000 and $150,000 stand to see the most generous reduction in taxes, too, according to a report from the watchdog group.
Here’s the CTF’s 2016 average tax estimates based on income level. While tax levels vary province to province, the estimates have been smoothed out into national averages:
The centrepiece of Ottawa’s new tax program is a broad-based cut for Canadians who earn between $45,000 and $90,000 combined with a hike on earners making north of $200,000 annually.
The first group will see their federal tax rate drop to 20.5 per cent from 22 per cent. The richest Canadians will see their federal rate rise four full percentage points, to 33 per cent of yearly income.Click here to view data »
During the fall election campaign, the Liberals said the tax increases on higher earners would pay for the “middle-class” tax cut.
Estimates released earlier this month however indicated the tax-reduction measure will cost Ottawa $1.2 billion this year —a sum adding to Ottawa’s expanding budget deficit.
WATCH: Gov. Gen. David Johnston’s speech from the throne in early December reiterated Ottawa’s pledge to cut taxes for middle-income earners and provide a more generous child benefit to those who need it.
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