Saskatchewan residents will see an additional $25.2 million in annual tax savings as a result of the indexation of the provincial income tax system in 2012.
Indexation means that the individual taxpayer now pays no Saskatchewan income tax on his or her first $18,075 of income, while a family of four pays no income tax on their first $46,850 of income.
Indexation protects taxpayers from "bracket creep", or the automatic increase in tax caused by inflation and preserves the real value of personal income tax credits. For 2012, income tax brackets and personal tax credit amounts will increase by 2.8 per cent, which represents the annual average inflation rate from October 2010 through to September 2011.
"Making sure Saskatchewan's income tax system is fully indexed to inflation each and every year helps to keep provincial taxes as low as possible," Finance Minister Ken Krawetz said. "It's part of the Saskatchewan Advantage."
In 2008, the provincial government introduced significant income tax reductions for all Saskatchewan taxpayers through increased personal exemption amounts and low-income tax credit enhancements.
In addition, Saskatchewan introduced the Active Families Benefit in 2009 as a refundable income tax credit to rebate up to $150 per child for cultural, recreational and sports activity fees for children aged 6 to 14 (the age of eligibility is being expanded in 2012 to children 17 and under).
In 2011, the Government again enhanced the personal income tax exemption amounts.
When combined with indexation, a single person with $25,000 annual income will pay $801 less in income tax in 2012 than in 2007. A family of four with $50,000 combined income will pay $2,595 less in 2012 compared to 2007 while a family of four with $75,000 combined income will pay $2,386 less.
"By the end of 2012, a family of four with $50,000 income will have saved more than $10,000 through our government's income tax reductions," Krawetz said. "Lower taxes are the best way to make life more affordable for Saskatchewan families."
The income tax brackets, basic and spousal credits, senior supplement, dependent child credit, age credit, disability-related credits, medical expense credit and the Saskatchewan Low-Income Tax Credit are all subject to indexation.
