Our tax system is progressive - as your income increases to the next tax bracket, the income above the next tax bracket is taxed at a higher rate. The new federal budget raised the tax brackets for the two lowest income brackets, which means that each of us will now pay less tax on income up to $81,000.

 

For those 65 and older, the age credit has been increased from $5,408 to $6,408. This benefits those seniors whose income is less than $75,000.

 

The government will allow a one-time reduction for 2008 RRIF withdrawals. You can go back and replace 25% of the minimum withdrawals from last year to try to retain more value in your RRIF because of the stock market conditions from last year.

 

To supplement the earnings of low income workers in Canada, the Working Income Tax Benefit was introduced in 2007. The 2009 budget proposes to increase these enhancements.

 

The income levels on which the Canada Child Tax Benefit is phased out have also been increased, so more families will be able to keep this benefit.

 

The Home Renovation Tax Credit is a temporary non-refundable tax break for renovation work done to homes from $1,000 up to $10,000. Eligible homes will include a house, cottage or condo if it is used for personal use by the owners. The kinds of work that are eligible for this tax credit include: 

You are now allowed to withdraw $25,000, an increase from $20,000 from your RRSP for the first time you buy a home.

 

To help stimulate growth in the housing sector, the government is offering a boost up for first-time home buyers. A new non refundable tax credit of $5,000 will provide tax savings of up to $750.