Payroll taxes have gone up. What to know if your paycheque is feeling pinched
Global News
Nearly all Canadian workers will have to pay a bigger sum of federal income-based taxes this year. Here's what to do if you are feeling the pinch.
With 2024 in full swing, most working Canadians are likely feeling the impact of higher federal payroll taxes on their paycheques.
The Canadian Taxpayers Federation (CTF) noted in a December report that nearly all Canadian workers will have to pay a bigger sum of income-based payroll taxes.
The tax changes highlighted in the CTF’s annual report also include higher alcohol and carbon taxes, increases to the maximum pensionable and insurance and a second Canada Pension Plan (CPP) hike mandated by the federal government.
Personal finance expert Barry Choi says the extent that the payroll increase impacts your financial wellbeing depends on how well you’re already coping with the rising costs of living.
“Generally speaking, it probably won’t affect you too much because it’s not like they’re upping the taxes by an insane amount. That said, with Canadian debt levels, everyone’s budgets are already stretched thin,” Choi told Global News. “Every penny counts these days.”
According to The Organisation for Economic Co-operation and Development, income tax combined with employer social security contributions accounted for 82 per cent of the total tax wedge in Canada in 2023. Here is how much Canadians will pay in federal income-based taxes this year.
The increases for 2024 are reflected based on new changes to Employment Insurance (EI) taxes and CPP, or payroll taxes. If you have an income of $30,000 a year, your income taxes have gone up a by a total nine dollars for the year. If you make $40,000, your total tax increase is $12. If you are making $50,000 a year, it’s $15. For $60,000 a year, the increase is $18. Canadians making between $80,000 and $200,000 face the largest income tax increase of $347 more.
The maximum pensionable earnings covered by the CPP tax have increased, according to the CTF. Employers and employees are now each required to pay $3,867, which represents a $113 tax increase in 2024 for workers earning $68,500 or more. The maximum pensionable earnings in 2023 were $66,600.
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