CARP members will welcome the broad based tax relief available to all lower and middle income Canadians, and the home improvement incentives, together with the $1,000 increase in the age credit. But beyond the re-announcement of the 25% reduction in mandated RRIF withdrawals, there is little in Budget 2009 to address the anxiety facing Canadians who have watched their retirement savings vaporize in the current market chaos.
The increase in the personal exemption and tax brackets means that people can earn more before paying federal income tax and more will be taxed at lower tax rates. But the savings are modest. Everybody benefits from the increased personal exemption to the tune of $33. From increasing the thresholds in the first 2 income brackets, a single senior with between $40,000 and $80,000 in total income [not including their OAS] will save $133 and in the upper tax brackets, taxpayers will save $284.
In addition, the $1,000 increase to the age credit is worth an additional $150 but as with the existing age credit, the credit is eroded as total income increases. Seniors with up to $32,312 will receive the full benefit of the increased age credit. The credit is fully phased out at $75,032 of income.