Income Splitting

See how income splitting can reduce the overall tax bill.
Income splitting involves transferring income from an individual with a higher marginal tax rate to an individual with a lower marginal tax rate.

Alberta
Name of taxpayer
Jenna
Jalen
Taxable income
Total
BEFORE splitting income
100,000
0
100,000
AFTER splitting income
50,000
50,000
100,000


No income splitting
Total
Income
$100,000
$0
$100,000
Taxes
$22,128
$0
A
$22,128
Marginal tax rate
33.89%
0.00%
 
Income splitting
Total
Income
$100,000
$0
$100,000
Taxes
$22,128
$0
B
$22,128
Marginal tax rate
33.89%
0.00%
 
Taxes saved by splitting income
(A minus B)

Results

Total Taxes
No Income Splitting
Income Splitting
Tax Savings



 
PDF

Assumptions
Calculations use marginal tax rates as of . Rates take all federal and provincial taxes and surtaxes into account and the basic personal tax credit.

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