Alberta Tax Brackets 2025: AB & Federal Rates

Welcome to the most comprehensive and authoritative guide to Alberta’s personal income tax system for the 2025 tax year. For decades, Alberta has been known for its “Alberta Advantage,” a combination of economic prosperity and a favourable tax environment that attracts workers and businesses from across Canada and the world. Understanding the province’s tax structure is essential for every Albertan, from the new graduate starting their first job to the seasoned professional managing their investments. The tax system in Canada is a layered framework of federal and provincial tax, and this guide is designed to demystify every aspect of it for you.

This article provides a deep dive into the 2025 tax brackets for Alberta and the federal government, explains the significant new tax changes introduced in Budget 2025, and offers a clear, step-by-step process to calculate your total tax liability. We will explore the critical roles of tax credits and deductions in reducing your tax bill and look at how your taxable income is calculated. Whether you are preparing to file your tax return or simply planning your financial future, this resource will equip you with the knowledge you need. We will cover the Alberta tax brackets and rates, the federal tax rates, and how they combine to determine your marginal tax rate.

Key Takeaways for the 2025 Tax Year

• New 8% Alberta Tax Bracket: The most significant change for 2025 is the introduction of a new, lower tax bracket. Albertans will now pay a tax rate of 8% on the first $60,000 of taxable income, offering broad-based tax relief.
• 2025 Alberta Provincial Rates: The Alberta provincial tax rates for 2025 are 8% (on the first $60,000), 10% (up to $148,269), 12% (up to $177,922), 13% (up to $237,230), 14% (up to $355,845), and 15% (above $355,845).
• 2025 Federal Rates: The federal income tax rates for 2025 are 15% (up to $55,867), 20.5% (up to $111,733), 26% (up to $173,205), 29% (up to $246,752), and 33% (above $246,752).
• Basic Personal Amount (BPA): The 2025 provincial BPA is $21,885. The basic federal BPA is $15,705, which is reduced for high-income earners. This non-refundable tax credit is a cornerstone of personal tax reduction.
• Inflation Indexing: The tax bracket thresholds and many credit amounts are updated based on inflation rates. For 2025, Alberta’s indexing factor is 2.0%, and the federal factor is 2.7%.
• Tax Filing Deadline: For most individuals, the deadline to file your 2025 income tax return is April 30, 2026. If you or your spouse are self-employed, the deadline is June 15, 2026, but any tax payable is still due by April 30, 2026.

2025 Alberta Provincial Tax Brackets

For the tax year 2025, the Government of Alberta has made a pivotal change to its personal income tax structure. The introduction of a new tax bracket is the centrepiece of its fiscal policy, aimed at making life more affordable for Albertans and Alberta businesses. This change directly impacts the amount of tax almost every taxpayer in the province will pay.

The province of Alberta uses a progressive tax system, which means the tax rate increases as income rises. You don’t pay a single rate on all your income; instead, you pay a specific rate on portions of your income that fall within designated tax bracket thresholds. This ensures that individuals with a higher level of income contribute a larger percentage of their earnings to provincial revenues. The Alberta income tax system is designed to be competitive, and these new rates reinforce that position.

Here is the official breakdown of the 2025 Alberta Personal Income Tax Rates and Brackets. The tax rate is applicable to the portion of income within each bracket.

Taxable Income	Alberta Tax Rate
First $60,000	8.0%
Over $60,000 up to $148,269	10.0%
Over $148,269 up to $177,922	12.0%
Over $177,922 up to $237,230	13.0%
Over $237,230 up to $355,845	14.0%
Over $355,845	15.0%

The most notable feature here is the newly legislated 8% income tax rate. Previously, the lowest bracket was 10%. This new structure provides a direct tax cut for anyone earning up to $60,000 and reduces the overall provincial tax bill for all taxpayers. This policy was enacted to provide meaningful tax relief and strengthen Alberta’s tax advantage within Canada. For someone earning $60,000, this change alone translates into a provincial tax saving of $1,200 compared to the old system (a 2% reduction on $60,000). This is a significant policy shift aimed at bolstering the personal income of working families and individuals across the province.

2025 Federal Tax Brackets for Albertans

Every Canadian taxpayer, regardless of their province of residence, is subject to federal income tax. This tax is administered by the Canada Revenue Agency (CRA) and is calculated separately from your provincial tax. Your total tax liability is the sum of your federal and provincial tax. Like Alberta, the federal government uses a progressive tax system with its own set of tax brackets and rates.

The federal tax brackets are also indexed to inflation each year to prevent “bracket creep,” where inflation pushes individuals into higher tax brackets without an actual increase in real purchasing power. For the 2025 tax year, the Government of Canada has applied an inflation adjustment factor of 2.7%. These federal income tax rates are applied to your federal income, which is generally the same as your provincial taxable income.

Here are the official 2025 Federal Income Tax Rates and Brackets that apply to all Albertans and other Canadians.

Taxable Income	Federal Tax Rate
First $55,867	15.0%
Over $55,867 up to $111,733	20.5%
Over $111,733 up to $173,205	26.0%
Over $173,205 up to $246,752	29.0%
Over $246,752	33.0%

Understanding both sets of brackets—federal and Alberta—is crucial. When financial experts discuss your income tax bracket, they are often referring to your combined marginal rate, which we will explore next. It’s the interplay between these two systems that determines your final tax bill. These Canadian tax brackets form the foundation of our nation’s approach to funding public services, from infrastructure to social programs like the Canada Child Benefit.

Combined Federal & Alberta Marginal Tax Rates 2025

The term marginal tax rate is one of the most important yet often misunderstood concepts in personal income tax. It is not the average amount of tax you pay; rather, it is the rate of tax you pay on your next dollar of earned income. When your income crosses a tax bracket threshold, only the income above that threshold is taxed at the new, higher rate, not your entire income. Your combined federal and provincial marginal tax rate is simply the sum of the federal and provincial rates for your specific income level.

For example, if you are in the 20.5% federal bracket and the 10% Alberta bracket, your combined marginal tax rate is 30.5%. This means for every additional $100 you earn, you will pay $30.50 in taxes on that specific amount. Understanding your Alberta’s marginal tax rate is vital for financial planning, especially when considering a raise, a bonus, or investment income.

Below is a comprehensive table of the Combined 2025 Marginal Tax Rates for Albertans. This table shows the precise income levels where the combined federal and provincial rate changes, giving you a clear picture of Alberta’s tax landscape.

Taxable Income	Federal Rate	Alberta Rate	Combined Marginal Tax Rate
First $55,867	15.0%	8.0%	23.0%
$55,867.01 to $60,000	20.5%	8.0%	28.5%
$60,000.01 to $111,733	20.5%	10.0%	30.5%
$111,733.01 to $148,269	26.0%	10.0%	36.0%
$148,269.01 to $173,205	26.0%	12.0%	38.0%
$173,205.01 to $177,922	29.0%	12.0%	41.0%
$177,922.01 to $237,230	29.0%	13.0%	42.0%
$237,230.01 to $246,752	29.0%	14.0%	43.0%
$246,752.01 to $355,845	33.0%	14.0%	47.0%
Over $355,845	33.0%	15.0%	48.0%

This table is an essential tool. For instance, you can see that an Albertan’s marginal tax rate jumps from 30.5% to 36.0% once their income exceeds $111,733. This knowledge can inform decisions about RRSP contributions, which are designed to reduce your income and potentially keep you in a lower income tax bracket. The tax rates for each bracket are applied sequentially, a core principle of a progressive tax system.

How to Calculate Your Income Tax in Alberta: A Step-by-Step Example

Seeing the tax rates and brackets in a table is one thing; applying them to your own personal income is another. To make this practical, let’s walk through a detailed calculation. This process will show you precisely how the amount of income in each bracket is treated and how the final tax payable is determined. We will use a sample taxable income of $85,000.

Taxable income is your gross income minus tax deductions like RRSP contributions or child care expenses. The calculation below assumes this is the final income figure after all deductions have been applied.

Step 1: Calculate 2025 Federal Tax for $85,000 Income

We will apply the federal tax rates to the portion of income in each respective bracket:

• 15% on the first $55,867: $55,867 x 0.15 = $8,380.05
• 20.5% on the remaining amount: The income in this bracket is $85,000 – $55,867 = $29,133.
• Tax on this portion: $29,133 x 0.205 = $5,972.27
• Total Federal Tax: $8,380.05 + $5,972.27 = $14,352.32

Step 2: Calculate 2025 Alberta Provincial Tax for $85,000 Income

Next, we do the same using the tax brackets for Alberta:

• 8% on the first $60,000: $60,000 x 0.08 = $4,800.00
• 10% on the remaining amount: The income in this bracket is $85,000 – $60,000 = $25,000.
• Tax on this portion: $25,000 x 0.10 = $2,500.00
• Total Alberta Tax: $4,800.00 + $2,500.00 = $7,300.00

Step 3: Calculate Total Tax Payable

This is the straightforward sum of the two amounts calculated above.

• Total Income Tax: $14,352.32 (Federal) + $7,300.00 (Provincial) = $21,652.32

This is the gross amount of tax payable before applying any non-refundable tax credits like the Basic Personal Amount.

Step 4: Determine Average vs. Marginal Tax Rate

This final step helps clarify the two concepts:

• Marginal Tax Rate: Looking at our combined table, an income of $85,000 falls into the bracket between $60,000.01 and $111,733. The marginal tax rate for this individual is 30.5%. This means a $1,000 bonus would be taxed at $305.
• Average Tax Rate: This is the total tax paid as a percentage of total taxable income.
  • Average Tax Rate = ($21,652.32 / $85,000) x 100 = 25.47%

As you can see, the average tax rate is significantly lower than the marginal rate. This distinction is fundamental to the Canadian tax system and is why you cannot simply multiply your entire income by your top bracket rate. To get a precise calculation for your specific situation, using a free alberta income tax calculator is highly recommended. Many tools, often called an income tax calculator Alberta, can automate this process for you.

Key Changes: 2025 vs. 2024 Tax Brackets

Every year, the tax brackets change, primarily due to inflation. This process is called indexing. Both the federal and provincial governments adjust the tax bracket thresholds and various credit amounts to ensure that Canadians’ tax bills don’t increase simply because of inflation. This indexing is based on inflation rates using the consumer price index (CPI). The specific period used for the calculation can differ, leading to different indexing factors.

For the 2025 income tax year, the key changes are:

• Federal Indexing: The federal tax brackets and credit amounts have been indexed by 2.7%. This figure is based on the average CPI change over the 12-month period ending September 30, 2024.
• Alberta Indexing: Alberta’s tax system has been indexed by 2.0% for 2025. This reflects the Alberta-specific CPI change.
• The New 8% Bracket: The most significant tax brackets change for Alberta is, of course, the introduction of the 8% bracket. This is a policy decision, not an indexing adjustment. It replaces the previous 10% rate on the first ~$60,000 of income, representing a major tax cut.

Let’s compare the lowest income tax bracket for Alberta between the two years:

• Alberta tax brackets 2024: 10% on the first $148,269
• 2025 tax brackets: 8% on the first $60,000, then 10% up to $148,269

This structural new tax bracket change provides more benefit than simple indexing. It fundamentally lowers the lowest income tax rate in the province. These adjustments are crucial for maintaining the fairness and integrity of the tax system over time. They ensure that your provincial tax bill reflects real income growth, not inflationary phantoms.

Looking Ahead: Projected 2026 Alberta Tax Brackets

While we have official data for the 2025 tax year, many individuals and financial planners need to look further ahead. Projecting the 2026 tax brackets can be a valuable exercise for long-term financial planning. It’s crucial to understand that the following figures for the 2026 tax brackets are estimates and are subject to change based on actual inflation and future government policy.

These projections are typically made using forecasted inflation rates from sources like the Bank of Canada and provincial economic outlooks. For this projection, let’s assume a forward-looking inflation rate of 2.1% for both federal and provincial systems.

Projected 2026 Federal Tax Brackets (Estimated)

Taxable Income	Federal Tax Rate
First $57,040	15.0%
Over $57,040 up to $114,080	20.5%
Over $114,080 up to $176,842	26.0%
Over $176,842 up to $251,934	29.0%
Over $251,934	33.0%

Projected 2026 Alberta Tax Brackets (Estimated)

Taxable Income	Alberta Tax Rate
First $61,200	8.0%
Over $61,200 up to $151,234	10.0%
Over $151,234 up to $181,480	12.0%
Over $181,480 up to $242,000	13.0%
Over $242,000 up to $362,962	14.0%
Over $362,962	15.0%

Disclaimer: These 2026 tax figures are for illustrative purposes only. The official tax brackets and rates for 2026 will be announced by the Government of Canada and the Government of Alberta in late 2025. However, using such projections can help in modeling future income scenarios and making more informed financial decisions today.

Essential Tax Credits and Deductions for Albertans in 2025

Simply calculating your tax based on the brackets gives you your gross tax payable. The next, crucial step is to reduce the amount of tax you owe by claiming credits and deductions. These are the primary tools the government provides to help you lower your tax bill. Understanding the difference is key:

• Tax Deductions: These are subtracted from your gross income to arrive at your taxable income. They reduce your income at your highest marginal tax rate. Examples include RRSP contributions and child care expenses.
• Tax Credits: These are subtracted directly from your tax payable. Most are non-refundable tax credits, meaning they can reduce your tax to zero, but you don’t get a refund for any excess amount. They are calculated by multiplying the credit amount by the lowest tax rate (15% federal, 8% provincial).

Understanding the Basic Personal Amount (BPA)

The Basic Personal Amount is the single most important non-refundable tax credit available to all Canadians. It recognizes that a certain amount of income should be exempt from tax to cover basic living costs.

• Federal BPA for 2025: The base federal BPA is $15,705. However, for individuals with a net income above $173,205, this amount is gradually reduced. It is fully eliminated for incomes over $246,752. The value of this credit is calculated at the lowest federal rate: $15,705 x 15% = $2,355.75 in federal tax savings.
• Alberta BPA for 2025: Alberta boasts one of the highest BPAs in the country, a key component of Alberta’s tax advantage. For 2025, the Alberta BPA is $21,885. This amount is the same for all income levels. The value of the credit is calculated at the lowest provincial rate: $21,885 x 8% = $1,750.80 in provincial tax savings.

In total, an Albertan can earn up to $21,885 before paying any provincial income tax, and up to $15,705 before paying any federal income tax, providing substantial tax exemptions at lower income levels.

Common Federal Non-Refundable Tax Credits

Beyond the BPA, there are numerous other personal income tax brackets credits you may be eligible for. These are claimed on your income tax return. Some of the most common include:

• CPP and EI Contributions: You can claim a credit for the Canada Pension Plan and Employment Insurance premiums deducted from your pay, as shown on your T4 slip. These are part of your payroll tax deductions.
• Age Amount: If you are 65 or older, you can claim the age amount credit.
• Disability Amount: A significant credit for individuals with a severe and prolonged impairment in physical or mental functions.
• Canada Pension Plan (CPP) Enhancement Credit: A credit related to the enhanced portion of CPP contributions.
• Canada Child Benefit (CCB): While the CCB itself is a non-taxable monthly payment, eligibility is determined based on the information in your tax return. Filing your return is essential to receive this benefit.
• Interest Paid on Student Loans: You can claim a credit for the interest paid on government student loans.

Key Alberta Provincial Tax Credits

Alberta also has its own set of provincial tax brackets credits that supplement the federal ones.

• Alberta Child and Family Benefit (ACFB): Similar to the CCB, this is a non-taxable amount paid to families with children under 18. It combines a base component and a working component.
• Charitable Donations Credit: You receive a credit for donating to registered charities. Alberta has a two-tiered credit: 8% on the first $200 of donations, and 21% on amounts above that. This is in addition to the federal credit.
• Political Contribution Tax Credit: A generous credit for contributions to Alberta political parties, constituency associations, or candidates.

Tax Deductions to Lower Your Taxable Income

Tax deductions are powerful because they reduce your income that is subject to the highest marginal tax rate. The most common tax deductions include:

• Registered Retirement Savings Plan (RRSP) Contributions: Perhaps the most well-known deduction. Contributions made to your RRSP can be deducted from your gross income, providing immediate tax relief and allowing your investments to grow tax-deferred.
• Child Care Expenses: You can deduct the cost of eligible child care to allow you or your spouse to work, run a business, or attend school.
• Union and Professional Dues: Annual dues paid to a union or professional association required for your employment are deductible.
• Employment Expenses: Certain employees (like those who work on commission or are required to pay for their own supplies) can deduct specific employment-related costs.

By strategically using these tax credits and deductions, you can significantly reduce the amount of tax you owe. It’s why using a comprehensive tax calculator or consulting a professional when you file your tax return is so valuable.

More Than Just Income Tax: Other Taxes in Alberta

While personal income tax is the largest single tax most Albertans pay, it’s not the only one. A complete financial picture requires awareness of other taxes that are part of the broader tax system.

Carbon Tax (Federal Fuel Charge) and the CAIP Rebate

The federal carbon tax, officially known as the fuel charge, applies in Alberta. It is a levy on fossil fuels, including gasoline and natural gas, designed to discourage their use. To offset the cost for individuals and families, the federal government distributes the Climate Action Incentive Payment (CAIP). This is a tax-free amount paid quarterly to eligible residents. For many households, the rebate amount exceeds the direct fuel tax costs they incur.

Goods and Services Tax (GST)

Alberta is one of the few provinces without a Provincial Sales Tax (PST). Residents only pay the 5% federal GST on most goods and services. This is a cornerstone of Alberta’s tax advantage, as it makes the province one of the most affordable places to shop and do business in Canada. The absence of a PST provides a direct, daily saving for all Albertans.

Property Tax

If you own property, you pay property tax to your local municipality. This tax is used to fund local services like roads, policing, fire departments, and community recreation. A portion of your property tax is also directed to the provincial government to fund the education system. Rates vary significantly by municipality.

Business Tax and Corporate Income Tax Rates

For entrepreneurs and business owners, Alberta offers a highly competitive business tax environment. The province has a general corporate income tax rate of 8%, one of the lowest income tax rate levels in the country. This is designed to attract investment and encourage businesses to establish and expand their operations in Alberta, creating jobs and economic growth for all.

Alberta Income Tax Calculator

With all the different rates, brackets, credits, and deductions, manually calculating your exact tax liability can be complex. This is where an Alberta income tax calculator becomes an indispensable tool. A good tax calculator will allow you to calculate the tax on your 2025 income tax return with a high degree of accuracy.

When you use a free Alberta income tax calculator, you’ll typically be asked to enter:

• Your total personal income from all sources (employment, self-employment, investments).
• Your RRSP contributions and other major tax deductions.
• Your eligibility for common non-refundable tax credits like the BPA, age amount, etc.

The income tax calculator Alberta will then apply the correct Canadian and Albertan tax brackets and rates to provide you with a detailed estimate of your:

• Federal tax payable.
• Provincial tax payable.
• Total combined tax.
• Your marginal and average tax rate.

Using such a tool before you file your tax return can help you understand if you should expect a refund or owe taxes, allowing you to plan accordingly. It is one of the best ways to apply the tax rates and brackets discussed in this guide to your unique financial situation. We empower Albertans to manage their taxes with our free Alberta calculator and tools.

Frequently Asked Questions (FAQ)

Why are taxes lower in Alberta?

Taxes in Alberta are generally considered lower than in many other Canadian provinces due to a combination of factors, which together create Alberta’s tax advantage:

1. No Provincial Sales Tax (PST): Albertans only pay the 5% federal GST.
2. No Provincial Health Premium: Unlike some provinces, Alberta does not charge a separate health premium.
3. High Basic Personal Amount (BPA): At $21,885 for 2025, Alberta’s BPA is among the highest in Canada, making a larger portion of income tax-free.
4. No Payroll Tax: Alberta is the only province with no general payroll tax, which reduces costs for employers.
5. Competitive Income Tax Rate: With the new 8% lowest income tax bracket, Alberta’s rates are highly competitive, especially for low and middle-income earners.

What is the difference between a tax credit and a tax deduction?

A tax deduction (like an RRSP contribution) is subtracted from your gross income before you calculate your tax. It reduces your income at your highest marginal tax rate. A tax credit (like the BPA) is subtracted from the amount of tax you’ve already calculated. Most are “non-refundable,” meaning their value is limited to the tax you owe.

When is the tax filing deadline for the 2025 tax year?

The income tax return filing deadline for the tax year 2025 is April 30, 2026. If you or your spouse are self-employed, the deadline to file is June 15, 2026. However, any tax payable is still due on April 30, 2026, to avoid interest penalties.

How does the capital gains inclusion rate change affect Albertans?

For 2025, the federal government has increased the capital gains inclusion rate. For individuals, the first $250,000 of capital gains realized annually will still be subject to the 50% inclusion rate (meaning 50% of the gain is added to your taxable income). For capital gains realized above the $250,000 threshold, the inclusion rate increases to two-thirds (66.7%). This change primarily affects high-income individuals and those selling significant assets, like a business or secondary property. The included portion of the capital gain is taxed at your combined marginal tax rate.