Payroll Withholdings Changes and Increases to Tax Bracket Thresholds
Effective January 1st, 2024
Tax brackets for Canada in 2024 are as follows:
- 15.00% for the first $55,867
- 20.50% for income over $55,867 up to $111,733
- 26.00% for income over $111,733 up to $173,205
- 29.32% for income over $173,205 up to $246,752
- 33.00% for income over $246,752
Each province also has its own set of provincial tax brackets, most having been indexed to
inflation, but using their respective provincial calculations.
The basic personal amount (BPA) ie. the amount of income an individual can earn without
paying federal tax has been increased to $15,705.00. For tax payors who earn amounts in
excess of this amount, the federal credit is calculated by applying the lowest federal personal
tax rate ie. 15%, to the BPA, making it worth $2,356.00, however, as this credit is nonrefundable, it is only work the maximum amount if you would otherwise have paid that much tax
within the calendar year.
CPP contributions:
For 2024, the CPP rate will remain at 5.95% but the maximum pensionable earnings have
increased to $68,500.00 (the “first earnings ceiling”), while the basic exemption amount remains
at $3,500.00. This means that contributors will be paying CPP on their first $65,000.00 earnings
($68,500.00, less the $3,500.00 exemption), a total of $3,867.50 for both the employee and the
employer.
Starting January 1st, 2024, however, the federal government has introduced a second CPP
contribution rate (CPP2) and earnings ceiling.
The second higher earnings limit creates a dual-threshold system and as a result, pensionable
earnings between $68,500.00 and $73,200.00 will be subject to a 4% contribution, with a
maximum contribution of $188.00 for both employer and employee.
EI contributions: The contribution rate for employees increases to 1.66% in 2024 (1.32% in
Quebec), up to a maximum contribution of $1,049.12 ($834.24 for Quebec) on 2024 maximum
insurable earnings of $63,200.00