Alberta Income Tax Brackets
Tax brackets in Alberta are not indexed, and so income thresholds and personal amounts have not increased since indexing was discontinued in 2019.
The basic personal amount in Alberta for 2021 is $19,369. You may also claim another $19,369 personal amount if you are supporting a spouse, common-law partner, or eligible dependent. If they have an income greater than $19,369, then you cannot claim this amount.
Alberta Personal Amounts 2021
| Basic Personal Amount | $19,369 |
|---|---|
| Spouse or Common-Law Partner | $19,369 |
| Eligible Dependant | $19,369 |
Anticipated 2022 Changes
As mentioned above, Alberta does not index their tax brackets to account for inflation established by the Consumer Price Index (CPI). As a result, high inflation rates will push you into a higher tax bracket and cause you to pay more provincial taxes.
Due to the lack of indexation, it can be expected that the tax brackets and rates will remain the same for 2022. There have been no formal updates on the 2022 Child and Family Benefit.
The History of Alberta Provincial Income Taxes
Alberta’s notable income tax history began with Premier Ralph Klein (Progressive Conservative) in 1999. Klein introduced a flat tax, meaning anyone above a certain income threshold paid a fixed 10% provincial income tax. The following Premier, Ed Stelmach (Progressive Conservative), also removed health care premiums in 2009.
Rachel Notley (New Democratic Party) became Premier in 2015 and shook up Alberta income taxes. She introduced a progressive tax system whereby those earning a higher income pay a higher tax percentage. This introduction ended the flat tax system introduced by Ralph Klein 16 years prior. Today, Jason Kenney (United Conservative Party) reigns as Premier and has stood by Notleys’ progressive tax system. Alberta continues to be a great province for real estate investors and has one of the simplest eviction processes in Canada.
Alberta Child and Family Benefit
The Alberta Family Employment Tax Credit (AFETC) and the Alberta Child Benefit (ACB) were replaced by the Alberta Child and Family Benefit (ACFB) starting July 1, 2020.
The new Alberta Child and Family Benefit starts July 2020. The benefit is tax-free and is paid to families with children under 18.
Alberta Child and Family Benefit 2021
| Base Component | Working Component | |
|---|---|---|
| First Child | $1,330 | $681 |
| Second Child | $655 | $620 |
| Third Child | $655 | $371 |
| Fourth Child | $655 | $123 |
You will receive the full base component amount if your family income is less than $24,467. If your family income is more than $24,467, you will receive a reduced amount. The benefit will be reduced by approximately 0.8% of your income above the $24,467 threshold. The ACFB base component is available to families with or without employment income.
In order to receive the working component benefit, your family must have an income of more than $2,760. The amount of the working component is 15% of employment income over $2,760, up until the maximum benefit amount. The working component benefit is reduced if your family income is more than $41,000, but approximately 0.8% of your income above the $41,000 threshold.
While all families are eligible for the base component whether they have employment income or not, only families with employment income are eligible for the working component. This encourages families to stay in the workforce, as they can then claim both the base and working components of the benefit.
The ACFB is paid in August, November, February, and May. ACFB is not part of the Canada Child Benefits (CCB).
Monthly Alberta Child and Family Benefit 2021
| Monthly Base Component | Monthly Working Component | |
|---|---|---|
| First Child | $110.83 | $56.75 |
| Second Child | $55.41 | $51.66 |
| Third Child | $55.41 | $30.91 |
| Fourth Child | $55.41 | $10.25 |
Source: Canada Revenue Agency
Canada Pension Plan and Employment Insurance
The Canada Pension Plan (CPP) is a monthly taxable income you receive in retirement. The amount you get in retirement is determined by your average salary, contributions to the plan, and the age you begin receiving payments. To be eligible for CPP, you must be at least 60 years old and have made valid pension contributions.
Alberta employees must contribute to the Canada Pension Plan (CPP) and Employment Insurance (EI). Your employer will match CPP contributions, while EI payments will be matched at a typical rate of 1.4x. However, self-employed individuals must pay the total CPP contribution individually. Additionally, those who are self-employed can optionally not contribute to EI.