In 2024, several significant updates were made to Canada’s personal tax framework:
Updates to Federal Tax Brackets and Rates
Basic Personal Amount (BPA): Increased to $15,705, allowing individuals to earn this amount tax-free.
Age Amount: Increased to $8,790, allowing seniors over 65 years to earn this amount tax-free.
Federal Marginal Tax Rates:
15% on the first $55,867 of taxable income.
20.5% on taxable income from $55,867 to $111,733.
26% on taxable income from $111,733 to $173,205.
29.32% on taxable income from $173,205 to $246,752.
33.33% on taxable income exceeding $246,752.
These adjustments account for annual inflation indexing.
Registered Retirement Savings Plan (RRSP) Limit: The contribution limit for RRSP has increased to $31,560, allowing for larger contributions. To check your available RRSP limit, refer to your 2023 Notice of Assessment. Contributions for the 2024 tax year can be made until March 1, 2025.
Tax Free Saving Account (TFSA) Limit: The TFSA contribution limit has increased to $7,000, enabling individuals to make larger contributions.
First Time Home Buyer Saving Account (FHSA) Limit: The FHSA contribution limit for 2024 was $8,000 for the eligible Home Buyers, Lifetime limit is $40,000. Contributions are tax deductible like RRSP.
Canada Pension Plan (CPP): The CPP contribution rate for 2024 was 5.95% (up to a maximum of $3,867.50) for employees, with an equal contribution required from employers. The basic exemption was $3,500. For self-employed individuals, the rate was 11.90% (up to a maximum of $7,735.00).
Employment Insurance Benefit (EI): Unemployment benefits have increased from $688 per week in 2024 to $695 per week in 2025, while parental benefits have risen from $401 per week in 2024 to $417 per week in 2025. The EI premium rate contribution) for employees has decreased from 1.66% (with a maximum annual premium of $1,049.12 in 2024) to 1.64% in 2025.
Increase in Lifetime Capital Gains Exemption (LCGE)
The LCGE for qualified small business corporation shares increased to $1.25 million, offering enhanced tax relief on eligible capital gains.
Temporary Federal Sales Tax Relief:
The federal sales tax was temporarily eliminated on select items from December 14, 2024, to February 15, 2025. Eligible items include children’s clothing, toys, restaurant meals, and holiday-related goods.
Conclusion
Evey year Canada Revenue Agency make changes to adjust the effects of inflation in Canada’s tax system. At Blue Tax and Accounting Services, we provide expert guidance and customized solutions to meet your needs.