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Last updated: October 27 2020
2021 Tax Brackets
Walter Harder & Evelyn Jacks
Knowledge Bureau’s Income Tax Estimator, a sophisticated software tool used in teaching our certificate personal tax filing and planning courses, incorporates the most recent changes to tax brackets and known provisions including the calculation of the Canada Recovery Benefits. We have now calculated the 2021 tax brackets based on CPI figures released last week to enable students and Knowledge Bureau Calculator subscribers to prepare projections for 2021 taxes payable as part of year-end tax planning activities.
Each year the federal and most provincial tax brackets are indexed based on the increase in the Consumer Price Index from October 1 of the second previous year to September 30 of the previous year. The 2021 rates are based on the CPI increase from October 1, 2019, to September 30, 2020. As Statistics Canada has announced the September CPI figures last week, it is now possible to determine the indexation factor(s) for 2021.
The math shows that the federal tax brackets will be indexed by 1.0%, so here, unofficially, are the federal brackets for 2021:
|
2021 Brackets (unofficial) |
2020 Rates |
|
Up to $13,808 |
0 |
|
$13,809 to $49,020 |
15% |
|
$49,021 to $98,040 |
20.5% |
|
$98,041 to $151,978 |
26% |
|
$151,979 to $216,512 |
29% |
|
Over $216,512 |
33% |
For 2021 the basic personal amount will be $13,808 for taxpayers whose income is below $151,978. For those whose income level is in the 33% bracket ($216,512 or higher), the basic personal amount is $12,421. For taxpayers whose income level is in the 29% bracket ($151,979 to $216,512), the basic personal amount is reduced by one dollar for each $44 increase in income over $151,978.
Most personal amounts are also indexed by the same indexation factor.
The numbers are unofficial. The official numbers will be released by Canada Revenue Agency in the coming weeks.
Subscribe to Knowledge Bureau Calculators.
Additional Educational Resources. The most recent tax changes and year end tax planning strategies for 2020 will be discussed at the November CE Summits, with a focus on business owners and investors. Register online by October 31 to take advantage of early-bird tuition rates.
Also newly updated: the Corporate Tax Filing Fundamentals Course
