Wealth Strategies: 2024 Tax Numbers and the Impact of Inflation

Milestone Wealth Management Ltd. - Dec 12, 2023

With 2023 quickly wrapping up, let’s review taxes, benefits, and the impact inflation will have on these numbers in 2024. With the recent heightened inflation numbers, individual taxable account contributions, tax-brackets, and benefits will see an increase which can directly impact Canadians.

The Canada Revenue Agency (CRA) has announced the Inflation Adjustment Factor for 2024 will be 4.7%, which is down from 2023’s 6.3%, but still up significantly from 2022’s 2.4%. This will have an impact on tax-brackets starting January 1st, 2024, as well as increases in amounts for certain benefits, such as GST/HST credit and Canada Child Benefit, starting July 1st, 2024 (beginning of the program year), which are income tested and based on your net income reported on your 2023 tax return.

Important Numbers for 2024:

  • 2024 Tax Brackets:
    • All five federal income tax brackets for 2024 have been indexed to inflation using the 4.7% rate and are shown in the table below:


Federal Income Tax

$0.00 up to $55,867


Above $55,867 up to $111,733


Above $111,733 up to $173,205


Above $173,205 up to $246,752


Above $246,752



  • Basic Personal Amount (BPA):
    • The BPA is the amount of income an individual can earn without paying any federal tax. In December 2019, the government announced an increase of the BPA annually until it reached $15,000 in 2023, after which it will be indexed to inflation. The increased BPA for 2024 is now $15,705, meaning you can earn up to this amount in 2024 before paying any federal income tax. For taxpayers earning above this amount, the value of the federal credit is calculated by applying the lowest federal personal income tax rate (15 per cent) to the BPA, making it worth $2,356.
  • CPP Contributions:
    • For 2024, employee and employer Canada Pension Plan contribution rates will remain at 5.95%, but the Year’s Maximum Pensionable Earnings (YMPE), will increase to $68,500, while the basic exemption amount remains at $3,500.
    • Therefore, the 2024 maximum CPP contribution will be $3,867.50 for each of the employee and employer portions. The self-employed CPP contribution rate remains at 11.9%, and the maximum contribution will increase to $7,735.
    • Importantly, starting January 1st, 2024, a second CPP contribution rate and earnings ceiling is being introduced. The Year’s Additional Maximum Pensionable Earnings will only affect workers whose income is above the first earnings ceiling. The level of the second earnings ceiling is based on the value of the first earnings ceiling. For 2024, the second ceiling was set at an amount that is 7% higher than the first ceiling, and for 2025, the second ceiling will be set at an amount that’s 14% higher than the first ceiling.
    • As a result, pensionable earnings between $68,500 and $73,200 in 2024 will be subject to second CPP contributions at an employee and employer rate of 4%, with a maximum contribution of $188 each. The 2024 self-employed CPP2 contribution rate will be 8%, and the maximum self-employed contribution will be $376.
  • Employment Insurance Premiums:
    • A contribution rate for employees of 1.66% (1.32% for Quebec) up to a maximum contribution of $1,049.12 ($834.24 for Quebec) on 2024’s maximum insurable earnings of $63,200.
  • TFSA Contribution Limit:
    • The 2024 TFSA contribution limit will increase to $7,000 (up from $6,500). For someone who has never contributed to a TFSA and has been a resident of Canada and at least 18 years of age since 2009, the cumulative TFSA limit will be $95,000 in 2024.
  • RRSP Limit:
    • The RRSP contribution limit for 2024 is 18% up to a maximum of $31,560, up from $30,780 in 2023.
  • Old Age Security (OAS):
    • If you receive OAS, the OAS repayment threshold is set at $90,997 for 2024, meaning your OAS will be reduced in 2024 if your taxable income is above this amount.
  • New Alternative Minimum Tax (AMT):
    • Finally, keep in mind the proposed changes to the AMT system are set to take effect January 1st, 2024, although only draft legislation has so far been released. The AMT imposes a minimum level of tax on taxpayers who claim certain tax deductions, exemptions, or credits to reduce the tax they owe to very low levels. If the amount of tax calculated under the AMT system is more than the amount of tax owing under the regular tax system, the difference is payable as AMT for the year.
    • Your AMT may be higher in 2024 (compared to 2023) if your taxable income is more than $173,205, and you have certain types of income that are taxed at lower rates than ordinary income, or deductions or credits that reduce taxes payable. These include capital gains, employee stock options, Canadian dividends, unused losses carried forward from prior years, certain deductions such as interest expenses, and non-refundable tax credits like the donation tax credit.

Sources: Financial Post, Canada Revenue Agency

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