In 2024, Ontario’s personal income tax brackets and credit amounts were adjusted for inflation, with an indexation factor of 1.045. This means that these tax brackets and credit amounts increased by approximately 4.5%. This adjustment is part of an annual review to reflect changes in the cost of living, as measured by the Consumer Price Index.

Impact of Indexation

The indexation of tax brackets typically helps taxpayers by slightly reducing the burden of “bracket creep,” where inflation could otherwise push income into higher tax brackets without a real increase in purchasing power. However, not all tax brackets are indexed. For 2024, the tax brackets for incomes at $150,000 and $220,000 were not adjusted for inflation. This could affect higher-income earners who might find a larger portion of their income taxed at higher rates than expected.

Important Details

While this change is automatically applied when taxpayers file their income tax returns, it’s important for individuals and families to be aware of these adjustments, as they can influence financial planning and tax liability. Taxpayers should consider how the indexation might affect their deductions and tax credits, particularly in terms of reducing taxable income.

Further Information

For more detailed information about the specific figures and how these adjustments might impact your financial situation, you can visit the Canada Revenue Agency (CRA) website or the Ontario Ministry of Finance website. Both provide resources and tools that help calculate tax liabilities and understand provincial tax policies. Additionally, consulting with a tax professional can provide personalized advice tailored to individual financial circumstances.