A middle class tax reduction was introduced for 2016. It has been called a middle class tax cut because it is supposed to primarily benefit the families of middle class Canadians.
This federal tax reduction affects income earned within the second tax bracket, which in 2016, is between $45,282 and $90,563.
Within this bracket, the federal tax rate will drop from 22% to 20.5%.
Not all income within this bracket will be taxed at the same rate in British Columbia. This is because provincial brackets are significantly different than those of their federal counterparts. Within this federal bracket, there are three tiers of taxes in British Columbia.
For income from $45,282 to $76,421, the total tax rate will be 28.2%. On income earned between $76,421 and $87,741, the rate increases to 31.0%.
Finally, income between $87,741 and $90,563 will be taxed at 32.79%. The maximum tax savings from this measure will be $679 per person.