2019 Alberta Marginal Tax Rates

How much you pay in income taxes will depend on how much you make and more importantly how you make your money.  There isn't a flat tax anymore, but the second lowest bracket, starts after many residents of other provinces have gone through all their tax brackets.  The most taxed earnings will be derived from labour, followed by capital gains or dividends depending on your marginal tax bracket.
    Depending on how you earn your money you can pay as much as 48% in income tax in Alberta and would need to earn $1.92 just to net you a dollar after the income taxes have been paid.


Credit Card Nerd Math

For the after tax earning all we do is take a dollar and subtract the taxes paid at the marginal tax rates.  For example, if you make less than $47,630 you will keep 75 cents on your last dollar earned.  $1 - ($1 x 25%) = $0.75.
    For the amount needed to save a dollar we took a dollar and divided it by the after tax earnings rate.  For example, someone with a $40,000 salary would get to keep 75 cents for their last dollar earned and would need to earn $1.33 to take home a dollar.  $1/0.75 = $1.33, this is also the amount you effectively earn by saving a dollar at this marginal tax rate.
    Below we have two charts with the marginal tax rates, the amount of after tax earnings for every dollar earned, the amount you need to earn to take home a dollar, the tax rate on dividends received and the tax rate on the capital gains tax that you have.  The first chart is the Alberta income tax by itself and the second chart combines the federal and provincial income taxes in Alberta.



2019 Provincial Marginal Tax Rates in Alberta

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate*

Capital Gains Tax Rate

first $131,220

10%

$0.90

$1.111

0%

5%

over $131,220 up to $157,464

12%

$0.88

$1.136

2.76%

6%

over $157,464 up to $209,952

13%

$0.87

$1.149

4.14%

6.5%

over $209,952 up to $314,928

14%

$0.86

$1.163

5.52%

7%

over $314,928

15%

$0.85

$1.176

6.9%

7.5%


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Basic Personal Amount: Your first $19,369 in earnings are exempt from provincial income taxes in Alberta for 2019.
Capital Gains: Taxable income derived from capital gains will be reduced by half, making an effective marginal tax rate on capital gains that is 50% of your current marginal tax rate.  For example, if you have $10,000 in capital gains, you would have $5,000 in taxable income from your capital gains.



2019 Combined Federal and Provincial Marginal Tax Rates in Alberta

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate*

Capital Gains Tax Rate

first $47,630

25%

$0.75

$1.333

-0.03%

12.5%

over $47,630 up to $95,259

30.5%

$0.695

$1.439

7.56%

15.25%

over $95,259 up to $131,220

36%

$0.64

$1.563

15.15%

18%

over $131,220 up to $147,667

38%

$0.62

$1.613

17.91%

19%

over $147,667 up to $157,464

41%

$0.59

$1.695

22.05%

20.5%

over $157,464 up to $209,952

42%

$0.58

$1.724

23.43%

21%

over $209,952 up to $210,371

43%

$0.57

$1.754

24.81%

21.5%

over $210,371 up to $314,928

47%

$0.53

$1.887

30.33%

23.5%

over $314,928

48%

$0.52

$1.923

31.71%

24%


Federal Personal Amount: Your first $12,069 in earnings are exempt from Federal taxes in 2019.


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Tax on Eligible Dividends in Alberta

Eligible Canadian dividends that you have received will be grossed up by 38%.  You will also be given a 10% provincial dividend credit as well as a 15.0198% federal dividend tax credit on your grossed up dividends.
    Someone that has a $19,369 annual salary and has been paid $3,000 in dividends in a non-registered account will have no additional tax paid on their dividends that they have received.  The rate is nil in Alberta, because corporate taxes has already been paid on the company's earnings.
    Someone that has a $19,369 annual salary and has been paid $3,000 in dividends in a non-registered account will have a total tax rate of -0.03% on their dividends that they have received.  The combined federal and provincial tax rate on dividends received would be (($1 x 1.38 x 25%) - ($1.38 x 25.0198%))/$1 = -0.03% at this bracket.

How the math works;

  • first off your $3,000 in dividends will increase your taxable income by ($3,000 x 1.38) = $4,140
  • You will get a dividend tax credit of ($4,140 x 10%) = $414
  • You will be taxed on your $4,140 at 10% and will have your taxes reduced by $414
  • This works out to ($4,140 x 10% - $414) = $0 in net taxes on your dividends
  • The effective tax rate would be 0%

For the other tax brackets, we will assume that you are getting paid $3,000 in dividends to keep the calculations simple.

  • At the second bracket the tax on dividends paid would be ($4,140 x 12% - $414)/$3,000 = 2.76%
  • At the third bracket the tax on dividends paid would be ($4,140 x 13% - $414)/$3,000 = 4.14%
  • At the fourth bracket the tax on dividends paid would be ($4,140 x 14% - $414)/$3,000 = 5.52%
  • At the top bracket the tax on dividends paid would be ($4,140 x 15% - $414)/$3,000 = 6.9%

Provincial Tax Rates: Provincial Tax Rates 2019
Alberta Personal Tax Credit 2019
Federal Tax Rates: http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html
Federal Dividend Tax Credit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/425-eng.html