Anyone earning less than $45,282 need not scour their paycheque for tax cuts in the new year — they aren't there.
Federally, the government has promised help for families with children in this income bracket, but that won't come until July 1 in the form of the new Canada Child Benefit payments.
But those who will benefit from tax cuts may be hard-pressed to spot them on on their first paycheque of 2016.
The Liberals brought in a "middle-class tax cut" that reduces the federal tax rate on income between $45,282 and $90,563. But the maximum benefit from this tax cut is actually reaped by those making between $90,563 and $200,000 a year — their taxes are going down by $680. That's because people in that higher income class also benefit from the cut in taxes to that $45K to $90K income bracket.
That $680 cut works out to $26.15 more for paycheques issued every two weeks. But, there's a catch.
People in that income bracket will have maxed out their Canada Pension Plan and Employment Insurance contributions at some point earlier in 2015 and were no longer seeing those deductions in the latter part of 2015.
So, come January, once those CPP and EI deductions kick back in — the extra $26.15 will seem to disappear.
B.C. earners see biggest boost...
Factoring in provincial income tax changes, the best situation to find yourself in 2016 is to be a resident of British Columbia pulling in $200,000 a year.
The province is eliminating a temporary tax-bracket on income over $151,050, which will drop the provincial taxes on income above that threshold by 2.1 percentage points.
Add in the provincial and federal cuts, and those people are pocketing $1,700 in extra cash this coming year.
Even with that amount, it will be tough to spot it on the first paycheque. Taxes will be only $65 lower on a biweekly pay stub, while the resumption of CPP and EI deductions in the first part of 2016 will result in take-home pay that will be hundreds of dollars less per paycheque.
... while Albertans pay more
Those for whom the tax changes will be all too obvious? Albertans making more than $300,000 a year.
They are going to be paying significantly more tax as of Jan. 1.
For every dollar over $300,000 in income, Albertans will be paying 7.75 percentage points more in tax than last year.
In 2016, the new federal income tax rate of 33 per cent will start applying to income over $200,000 — and Alberta's new rate of 15 per cent starts applying to income over $300,000.
All told, someone with income of $500,000 in Calgary will be paying $19,500 more in taxes in 2016 than in 2015 — a bite of about $750 off every paycheque, not to mention the resumption of those CPP and EI deductions.
In fact, the only people likely to see more money on their first 2016 cheque — outside of pay raises or the like — are those earning $49,500 a year.
At that salary, CPP and EI contributions remain spread over the whole year, so the only scheduled change will be the effects of the "middle-class tax cut." It drops the rate of federal tax on income between about $45,282 and $90,563 to 20.5 per cent from 22 per cent.
For someone who just reached last year's EI premium deduction limit, it means they will be saving $63.17 in taxes next year — or $2.43 for every two-week pay period.