Purtzki, Johansen + Associates


The Government’s Inflation Adjustment Means Big Tax Savings for 2023

The federal government’s annual indexation adjustment for personal income tax and benefits, which is based on the rate of inflation, will be 6.3% for 2023, compared to 4% in 2022 and 1% in 2021.

You can earn $53,359 in 2023, compared to $50,197 in 2022 before being subject to the 20% tax rate.

On the other side of the spectrum, you can earn $235,676 before you reach the top tax rate of 53.5%, compared to $221,709 in 2022.

The threshold for the old age security (OAS) repayment increases to $86,912 in 2023, up from $81,761 in 2022. That would allow you to increase your RRSP income by about $5,000 before the 15% claw-back kicks in.

The lifetime capital gains exemption amount of selling the shares of your business or practice will rise to $971,190 in 2023, up from $913,630 in 2022.

Not all tax credits and benefits are indexed to inflation. One example is the pension income tax credit, which remains the same at $2,000.

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