Wealth Strategies: New Lower Tax Bracket in Alberta

On February 27th, Alberta’s Minister of Finance Nate Horner tabled the 2025 Alberta provincial budget. Normally that wouldn’t be big news in the financial planning world, but in this case the budget included an important provincial income tax cut for Albertans.

The new provincial tax bracket is set at 8% on the first $60,000 of income, down from the previous 10%. Originally slated for 2026, the new tax bracket has been introduced now and is effective January 1, 2025. This change is expected to save the average Albertan $750 in tax this year.

Also, keep in mind that the Basic Personal Exemption in Alberta is set at $22,323 for 2025, which essentially means that provincial income tax doesn’t start until income hits that level. This is much higher than the federal Basic Personal Exemption level of $16,129 (or $14,538 for higher income earners).

Long time Albertans will recall that Ralph Klein introduced a flat provincial tax of 10% regardless of income. That platform stayed in place until 2015 when the NDP government introduced graduated increases on higher incomes of 12 – 15% provincial tax.

Here is a look at the new Alberta tax brackets:

Source: CI Global Asset Management

And here is a look at the combined provincial and federal tax brackets:

Source: TaxTips.ca

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