Here's where Albertans will find extra expenses — and cost relief — in 2023

As the calendar flips to 2023, procuring champagne may be more top of mind than the contents of your pocketbook.

But New Year's Day is often the time that government decisions take effect.

Here are some places you can expect to shell out more money — and some measures keeping it in your wallets — as the new year begins.

Affordability payments

As part of a $2.8-billion affordability package, hundreds of thousands of Albertans will be eligible for $100 a month for six months to help with their expenses.

People who receive benefits from income support, the persons with developmental disabilities program, assured income for the severely handicapped (AISH) and the seniors' benefit will automatically receive the payments. The province has yet to announce the date the deposits will appear in bank accounts.

Seniors and families with children younger than 18 that have household incomes below $180,000 a year can also qualify for the payments at $100 per child.

The payments are supposed to come monthly between January and June. Affordability and utilities press secretary Andrea Farmer said in an email the province is setting up an application and distribution system that can handle what is expected to be millions of payments.

She said an online application portal is coming and should start delivering the payments by late January.

University of Calgary economics professor Trevor Tombe says this program is perhaps the biggest boon to families with multiple children, who will get back nearly as much as they are spending due to higher prices.

Trying to keep up with inflation 

Alberta's frozen income tax brackets are thawing, meaning the basic personal amount people can earn before paying any provincial tax is rising.

Workers can also earn more money at a lower tax rate. For example, Albertans could earn up to $131,220 at the 10 per cent tax rate in 2021 before paying higher taxes on additional earnings. That threshold will rise, retroactively, to $134,238 for 2022.

This change means some employees could see less provincial tax deducted on their first few paycheques of 2023.

AISH, income supports, disability benefits, the seniors' benefit and the Alberta child and family benefit are also being re-tethered to inflation as of 2023. Hundreds of thousands of Albertans should see their benefits rise by six per cent, starting with their January payments.

Old age security and Canadian Pension Plan (CPP) benefits are also indexed to inflation, which leaves seniors as the big beneficiaries, Tombe says.

"For a single elderly individual in Alberta, all these measures, CPP, the gas tax, the cash, $100 amount, is going to total top about $220 a month in additional income that kicks in for them starting in January."

No provincial fuel tax for six months

Since April 2022, Alberta has had a program that removes a portion of the provincial fuel tax as oil prices rise. The government has cancelled the 13.6-cent-per-litre tax outright on gasoline and diesel for the next six months. Tombe says this even helps non-drivers as transportation costs for goods will be lower.

Electricity rebates continue

The UCP government has promised most consumers a $75 credit on both January and February power bills, followed by $25 rebates in March and April. Any unused credit would carry over to the subsequent bill.

For consumers who buy power using the regulated rate option, the government has put in a price ceiling of 13.5 cents per kilowatt-hour in January, February and March.

The rising cost of living

The Alberta government says these measures were necessary to help defray increasing costs on several fronts. Although the Bank of Canada predicts inflation won't be as punishing in 2023 as it was the previous year, consumer costs are still expected to rise about three per cent.

Borrowing money to finance a home or a car isn't as cheap as it once was. During 2022, the Bank of Canada's key lending rate rose four percentage points to 4.25 cent, making it more expensive to get a mortgage and increasingly pricey for people with variable rate mortgages.

Tombe says rising interest rates do benefit some people — those living off savings, like seniors, who will see the value of those savings grow.

CPP and EI deductions growing

Higher employment insurance and Canada Pension Plan contributions may put a damper on things.

The federal employment insurance deduction rate is rising for the first time in three years, to 1.63 per cent, and the maximum earnings on which workers pay into the program is rising to $61,500, up $1,200. Tombe says this is to help pay off a substantial deficit the program accumulated during the COVID-19 pandemic.

Similarly, CPP contribution rates are going up 0.25 percentage points to 5.95 per cent in 2023 for both employees and employers. The maximum pensionable earnings are also rising to $66,600.

Alberta is part of the federal government's carbon tax program, which is gradually increasing the price on greenhouse gas emissions. As of April 1, 2023, the carbon tax on gasoline will be 14.3 cents per litre, up from 11 cents now.

What to watch for in 2023

Tombe says it's possible the Bank of Canada might raise its key lending rate again come January.

Albertans should also keep an eye on the provincial budget, which has to be tabled before the end of February, for more possible affordability help, he said.

With a fixed election date looming on May 29, 2023 and the province expecting a more than $12-billion surplus, Tombe says the conditions could be right for the government to offer more relief.

An EY report released in December found Alberta had the highest private passenger vehicle insurance rates in the country. 

Farmer, the affordability press secretary, says the government is also considering taking steps on auto insurance. She didn't provide details.