Tax and Protection
Alberta provincial budget: 2025 personal income tax savings announced
By ATB Wealth 28 February 2025 1 min read
Tabled on Feb. 27, the 2025 Alberta provincial budget included promised income tax savings, with a new 8% personal income tax bracket for income up to $60,000 coming into effect in 2025.
Tax brackets
Tax brackets exist in a progressive tax system, whereby tax rates increase along with taxable income. Taxpayers with low taxable income have low tax rates, while those with higher income levels also benefit from tax rate decreases implemented for lower brackets.
2025 personal income tax brackets and rates are outlined below along with the corresponding 2024 information for comparison purposes:
Source: ATB Wealth
Tax credits and the basic personal amount
Tax credits are used to reduce the amount of tax that would otherwise be payable, with the most common being the basic personal amount. For the 2025 tax year, the Alberta basic personal amount is $22,323. In general, credit amounts are multiplied by the tax rate for the lowest tax bracket (now 8%) to arrive at the resulting tax credit.
Potential tax savings
As outlined in the budget, individual taxpayers may save up to $750 per year beginning in 2025 as a result of the new tax bracket. This amount is calculated as 2% of the difference between $60,000 and the basic personal amount of $22,323.
Supplemental credit
In rare cases, an Alberta taxpayer may claim more than $60,000 of non-refundable tax credits. Budget 2025 introduces the supplemental credit to ensure that such taxpayers do not pay more in taxes due to the new tax bracket. The calculation for this new credit considers the total amount of certain non-refundable tax credits claimed by an individual that exceeds $60,000 multiplied by 2% (the difference between the rates for the first and second tax brackets).
For more information on personal income tax brackets, tax rates, tax deductions and tax credits, you may be interested in our article Understanding your personal taxes in Alberta, as you prepare to file your 2024 income tax return.
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