Alberta delays income tax cut, introduces electric vehicle tax

The provincial government's promised income tax break that would save Albertans hundreds of dollars a year will come in 2026 and 2027.

Introduced in Alberta's 2024 budget on Thursday, the new tax bracket on the first $60,000 of income is estimated to save Albertans a maximum of $760 a year.

The new tax cut — nine per cent in 2026 and eight per cent in 2027 — is expected to cost the government $1.4 billion annually.

Premier Danielle Smith asked Finance Minister Nate Horner to create the tax cut in her July 2023 mandate letter.

The budget states the tax bracket's implementation "is contingent on the province maintaining sufficient fiscal capacity to introduce the tax cut while maintaining a balanced budget," but Minister Horner said it is coming.

"I wouldn't say it's fully in doubt. We've laid out the plan here," he told reporters on Thursday before he introduced the budget in the Alberta legislature in Edmonton.

"We've put it in the budget; that is the plan."

In a televised address last week, Smith revealed her government would not cut spending but needed to show restraint — and delay personal income tax cuts.

"She promised you that you'd have more money in your pocket but that is not the case today," NDP Leader Rachel Notley said after the budget was tabled. "She broke her Number 1 promise of the last campaign. And we've had it confirmed that her future revenue projections do not include allowance for the tax cut in the next three years.

"We may see it before the next election, we may not. We just really don't know."

In other tax news…

Electric Vehicle Tax

Starting Jan. 1, 2025, electric vehicle owners will pay an annual tax of $200, paid when owners register their vehicles. The new tax won't apply to hybrid vehicles.

The budget states EVs "cause more wear and tear on provincial roadways while their owners pay no fuel tax."

The tax is expected to generate $1 million in revenue in 2024-25, $5 million 2025-26 and $8 million in 2026-27.

Fuel Tax Relief Program

The province's price-based fuel tax relief program is back after it was paused for all of last year.

Fuel tax rates are set quarterly based on the average West Texas Intermediate (WTI).

Until at least March 31, the tax rate for gasoline and diesel will stay at nine cents per litre, a figure that will save drivers $124 million during the first three months of 2024, the budget stated.

Albertans saved 13 cents per litre at the pumps while the program was paused.

Alberta is Calling Attraction Bonus

The government has created the Alberta is Calling Attraction Bonus, a one-time $5,000 refundable tax credit in an attempt to bring more professionals to the province starting this April.

Requirements include working in eligible occupations, staying for at least 12 months and filing 2024 taxes in Alberta.

Vaping Tax

Alberta is joining the existing federal-provincial vaping tax framework starting as early as Jan. 1, 2025.

As a result, the province expects to make $4 million in revenue in 2024-25 and $18 million in 2025-26.

Tobacco Taxes

The tax on cigarettes will grow by 2.5 cents to 30 cents per cigarette effective March 1. Smokeless tobacco will see the tax rise by 7.5 cents to 35 cents per gram.

The new taxes are expected to generate $25 million in revenue in 2024-25.