With the new year upon us, it’s a good time to review the major personal income tax changes for 2024. Here’s a rundown of the adjusted tax figures, as well as a new Canada Pension Plan rule taking effect this year.
Income tax brackets
The federal tax brackets for 2024 are increasing by 4.7%.
- Income up to $55,867 is taxed at 15%
- Income over $55,867 begins at 20.5%
- Income over $111,733 begins at 26%
- Income over $173,205 begins at 29%
- Income over $246,752 begins at 33%
The New Brunswick provincial tax brackets for 2024 are:
- Income up to $49,958 is taxed at 9.4%
- Income over $49,958 begins at 14%
- Income over $99,916 begins at 16%
- Income over $185,064 begins at 19.5%
Basic Personal Amount (BPA)
The BPA is the amount of annual income you can earn before you must pay any federal taxes. For 2024, if your net income is lower than $173,205, you will receive the full amount ($15,705). If your income is higher than $246,752, you will receive the minimum amount ($14,156). If your income falls somewhere between, your BPA will be gradually reduced until the minimum threshold is reached.
Canada Pension Plan (CPP) contributions
For 2024, the CPP contribution rate remains at 5.95% but the yearly maximum pensionable earnings limit (YMPE) increases to $68,500, which works out to a maximum annual contribution of $3,867.50 each by the employer and employee. If you are self-employed, you must pay both portions for a total maximum contribution of $7,735.
New for 2024: The CPP enhancement
Starting in 2024, if you earn more than the YMPE ceiling ($68,500) then you’ll also have to pay a second CPP contribution, called CPP2. CPP2 introduces a second earnings ceiling called the year’s additional maximum pensionable earnings (YAMPE), which is $73,200 in 2024. You will pay 4% on any income you earn that falls in the range between the YMPE and YAMPE ($68,500 and $73,200) to a maximum contribution of $188. If you’re self-employed you’ll pay 8% to a maximum of $376.
Employment Insurance (EI) premiums
EI premiums are also calculated as a percentage of your annual income, up to a maximum, which is $63,200 in 2024. With a rate of 1.66% that means the most you would pay in EI premiums this year is $1,049.12.
Tax-Free Savings Account (TFSA)
You get $7,000 in new TFSA contribution room in 2024, up from $6,500 in 2023. Any unused contribution room you have from previous years can be carried over, and the cumulative limit for those who have been eligible Canadians since 2009 is $95,000.
Registered Retirement Savings Plan (RRSP)
In 2024, the maximum RRSP contribution amount is $31,560, which means you must have earned at least $175,333 in 2023 to hit that limit.
Old Age Security (OAS)
In 2024, your OAS will be reduced through a recovery tax if your 2023 income was above $90,997.
We suggest that you talk to a tax professional to ensure you’re taking advantage of all the tax benefits available to you. As well, an MD Advisor* can help you plan now so you can be confident in your financial future. If you’d like to talk, email maryse.lanteigne@md.ca.
Maryse Lanteigne, CFP, MBA, Senior Financial Consultant, MD Management Limited
*MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals. MD Financial Management provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies and Scotia Wealth Insurance Services Inc. For a detailed list of the MD Group of Companies visit md.ca and visit scotiawealthmanagement.com for more information on Scotia Wealth Insurance Services Inc.
