Indexing federal and state income tax systems will allow us in 2023 to alleviate some of the bleeding in our wallets due to the sharp rise in the cost of living.
That means any tax credits you’re normally entitled to will be increased to give you several hundred dollars more.
While the Quebec government indexes the provincial tax system at a rate of 6.44%, the Trudeau government indexes the federal tax system at a rate of 6.3%.
On the province’s tax side, Treasury Secretary Eric Girard calculates that indexing tax tables, deductions and tax credits will “benefit” Quebec taxpayers about $2.15 billion.
At the federal level, indexing should represent about $2 billion in “tax breaks.”
Archive photo
The Canadian Revenue Agency headquarters in Ottawa.
tax rebate
However, the Legault and Trudeau governments could index their respective tax systems, but that will not impoverish them.
When inflation gallops, as it did in 2022, governments will benefit greatly from boosting tax revenues through wage increases, boosting tax revenues through soaring prices of taxable goods, etc.
To tell the truth, Quebec and Ottawa are simply letting us benefit from some of the extra income brought by skyrocketing prices caused by inflation.
This is tantamount to a “rebate” on this additional cost of living tax revenue!
In terms of indexation of tax bracket thresholds, it goes without saying that high-income taxpayers are bound to benefit most.
The reason is simple: They are the ones who pay the most taxes at both the federal and provincial levels.
At the same income as in 2022, indexation should “benefit” more than $1,000 in 2023 for taxpayers earning more than $120,000 in taxable income.
Turning now to the deductions and tax credits offered by the two governments, low and modest income households will reap the most benefits from indexing tax systems.
Here are the additional amounts that will be allocated on your Quebec tax return in 2023 compared to this year.
family allowance
- Per child: $168
- Single family: $59
work bonus
- Individual: $70
- Single family: $181
- Couple without children: $109
- Couple with children: $235
solidarity surcharge
- QST amount: $20
- Amount for accommodation: $47
- North Village: $117
Refundable Tax Credit for childcare costs
- Cap for children under 7 years old: $685
- Cap for children with disabilities: $940
- Child 7-15 cap: $345
amount based on age
- 65 and older: $219
- For retirement income: $194
amount per person live alone
- Base Amount: $119
- Single Parent Supplement: $147
There are other additional amounts for deductions and credits: Deduction for workers (+$80); amount for other dependents (+$295); Medical Expense Tax Credit (+82); Caregiver Tax Credit (+$84).
For the Federal and Canada Revenue Agency (CRA):
► All amounts related to non-refundable tax credits have been increased by 6.3% for 2022. This has the effect of adding the same amount to the targeted reductions in terms of Personal Base Amount, Spouse or Life Partner Amount, Age Amount, Employment Amount in Canada, Caregiver Amount, etc.
► Medical Expense Tax Credit increases by $156, while GST Credit increases by $19 per adult (plus $10 per child and plus $10 for single).
► Canada Child Benefit increases by $440 or $7,437 per child under age 6. For children aged 6 to 17, the allowance is $6,275, up from $372.
► The annual TFSA contribution limit increases to $6,500 in 2023, or $500 more than currently.
► The threshold at which retirement benefits start being reimbursed increases from $5,151 to $86,012.
