Starting next month, around two million Albertans will begin to see the effects of a new personal income tax system that the Alberta government says will help families better manage rising living costs.
The new tax structure includes the introduction of an 8% tax bracket on the first $60,000 of income, which will not only shift thresholds for higher brackets but also deliver significant savings to households across the province.
What the New Tax Cut Means for You
According to the Alberta government, the changes could result in:
- Up to $750 in savings per person in 2025
- A higher tax return next year, since the change is retroactive to January 1, 2025
- A 20% reduction in personal income tax for those earning under $60,000
Updated Alberta Tax Brackets for 2025:
| Tax Rate | 2024 Bracket | 2025 Bracket |
|---|---|---|
| 8% | N/A | Up to $60,000 |
| 10% | Up to $148,269 | $60,000.01 to $151,234 |
| 12% | $148,269.01 to $177,922 | $151,234.01 to $181,481 |
| 13% | $177,922.01 to $237,230 | $181,481.01 to $241,974 |
| 14% | $237,230.01 to $355,845 | $241,974.01 to $362,961 |
| 15% | $355,845.01 and up | $362,961.01 and up |
Treasury Board and Finance Minister Nate Horner stated, “It’s not just a tax cut. It’s a clear sign that we’re standing with Alberta families, helping them manage rising costs and plan for the future.”
Campaign Promise Turned Policy
Premier Danielle Smith campaigned on the promise to cut taxes during the 2023 election. The rollout of this income tax reform fulfills a key part of the United Conservative Party’s affordability platform.
The shift also repositions Alberta’s tax brackets for higher income levels, meaning middle-income Albertans will benefit more while low-income earners will see substantial savings on their annual returns.
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Source: Canadians spending less time with friends: StatCan
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