Canadian Tax Credits and Deductions: 10 Tax Breaks You Should Know
It’s easy to miss a tax break you qualify for. Knowing which Canadian tax credits and deductions apply to you can mean a smaller tax bill or a bigger refund.
Some tax breaks lower the income you’re taxed on. Others lower the tax itself. The Canada Revenue Agency (CRA) offers both, for individuals, families, employees, and business owners.
As Azim Dahya, CPA at Advanced Tax Services explains:
“People mix these up all the time. A deduction lowers the income you pay tax on. A credit takes money off your tax bill. Both can help, just in different ways.”
Below, we’ll explain how credits and deductions differ, then walk through 10 tax breaks worth checking before you file.
Canadian Tax Credit vs. Canadian Tax Deductions
Before we get to the list, here’s the key difference between a Canadian tax credit and Canadian tax deductions.
A deduction lowers your taxable income, which is the part of your income you pay tax on. A tax credit lowers the tax you owe. How much you save depends on things like your income, your tax bracket, and where you live in Canada.
Here’s a simple example. Say you claim a $1,000 deduction and your combined federal and provincial tax rate is 30%. That deduction saves you about $300. A $1,000 federal non-refundable credit saves you $140, because most federal credits are worth 14% of the amount claimed in 2026. Your province may add a bit more.
Refundable vs. Non-Refundable Tax Credit: What’s the Difference?
Canadian tax credits come in two types: refundable and non-refundable.
A non-refundable tax credit can lower your tax bill, but only down to zero. If your credits add up to more than the tax you owe, you don’t get the extra back.
A refundable tax credit also lowers your tax bill. The difference is that if there’s money left over after your tax reaches zero, it’s paid to you as part of your refund.
For example, say you owe $500 in tax and have $800 in credits. With non-refundable credits, your tax drops to $0 and the other $300 is lost. With refundable credits, you’d get that $300 back.
Some unused non-refundable credits, like tuition and donations, can be saved for a future year or passed to a family member. Many provinces and territories also have their own versions of these credits.
10 Canadian Tax Credits and Deductions to Check Before You File
Here are 10 common tax breaks, plus a bonus at the end. The first five are deductions, and the last five are credits.
1. RRSP Deduction
Money you put into a Registered Retirement Savings Plan (RRSP) can be deducted from your income, up to your personal limit.
For 2026, the most anyone can contribute is $33,810. Your own limit is usually 18% of last year’s earned income, up to that maximum, plus any room you didn’t use in past years. If you have a workplace pension, your limit may be lower. You can find your exact limit in your CRA My Account or on last year’s notice of assessment (the summary the CRA sends after you file).
If you don’t use all your room, it carries forward to future years. You can also contribute now and wait to claim the deduction in a year when your income, and your tax rate, is higher.
If you own a business, your RRSP plan should fit with how you pay yourself, since salary creates RRSP room and dividends don’t.
You have until March 1, 2027, to make RRSP contributions you can deduct on your 2026 tax return.
2. Business Expense Deductions
If you’re self-employed, you can deduct reasonable costs you pay to run your business and earn income.
Common examples include:
- Advertising
- Accounting and legal fees
- Office supplies
- Vehicle costs for business driving
- Interest on business loans
- Part of your home costs, if you work from home
- Meals with clients (usually 50%)
If something is used for both business and personal reasons, like your car or phone, you can only claim the business part. For example, if 40% of your driving is for work, you can claim 40% of your car costs.
Keep your receipts and a driving log. The CRA can ask for proof, and you need to keep your records for six years.
If you run your business on your own without incorporating, our guide to filing taxes as a sole proprietor explains how to report your income and expenses.
3. Moving Expense Deduction
Did you move for a new job, or to run your business somewhere new?
You may be able to deduct your moving costs if your new home is at least 40 km closer to your new work location. This is measured by the shortest normal driving route, not a straight line. For example, if your old home was 60 km from your new job and your new home is 15 km away, you’re 45 km closer, so you qualify.
Costs you can claim include:
- Movers and storage
- Travel to your new home
- Up to 15 days of temporary housing
- Some costs of selling your old home, like real estate fees
You can only claim these costs against income you earn at the new location. If you can’t claim it all this year, you can carry the rest forward to next year. Full-time students who move for school may also qualify.
Our guide to the moving expense tax deduction explains who qualifies and what you can claim.
4. Child Care Expense Deduction
If you pay for child care so you or your partner can work, run a business, or go to school, you may be able to deduct those child care expenses.
In most cases, the parent with the lower income claims it. The most you can claim each year depends on your child’s age:
| Child’s age | Yearly limit |
|---|---|
| Under 7 | $8,000 |
| 7 to 16 | $5,000 |
| Any age, eligible for the Disability Tax Credit | $11,000 |
You can claim costs like daycare, babysitters, nannies, and day camps. Overnight camps and boarding schools count too, up to a weekly limit. Payments to a relative under 18 don’t count, so keep receipts that show who you paid.
The child care expense deduction is a big one for families. The Department of Finance estimates it will save Canadians about $1.31 billion in federal tax in 2026.
5. Employment Expense Deductions
If your job requires you to pay for certain work costs yourself, and your employer doesn’t pay you back, you may be able to deduct them.
Common examples include:
- Home office costs, if you work from home more than half the time
- Supplies you use up on the job, like stationery
- Car costs for work travel (driving to and from work doesn’t count)
For most of these claims, your employer needs to fill out and sign Form T2200, which confirms you had to pay these costs as part of your job. Ask for it early, since you’ll need it before you file.
6. Disability Tax Credit
The Disability Tax Credit (DTC) is a non-refundable tax credit for people with a serious physical or mental condition that has lasted, or is expected to last, at least 12 months.
If the person with the disability doesn’t need the full credit, they can transfer what’s left to a family member who supports them, like a spouse or parent.
Having a diagnosis isn’t enough on its own. What counts is how much the condition affects your daily life, such as walking, seeing, dressing, or thinking clearly.
Once you’re approved, you can ask the CRA to review your returns for up to 10 past years. Approval can also help you qualify for other programs, like the Registered Disability Savings Plan (RDSP) and the Canada Workers Benefit disability supplement.
The Department of Finance estimates the DTC will save Canadians about $1.79 billion in federal tax in 2026.
Learn who qualifies and how to apply in our guide to the Disability Tax Credit in Canada.
7. Medical Expense Tax Credit
You can claim medical costs you paid for yourself, your spouse or partner, and in some cases your children or other family members you support.
Common examples include:
- Prescription drugs
- Dental work
- Glasses and contact lenses
- Private health plan premiums you pay yourself
- Physiotherapy and other medical services
There’s a catch: only costs above a minimum amount count. For 2026, that minimum is 3% of your net income or $2,890, whichever is less. For example, if your net income is $50,000, the first $1,500 of medical costs doesn’t count. If you spent $3,000, you’d claim $1,500.
Because the minimum is based on income, it’s often better for the lower-income spouse to claim the whole family’s medical costs. You can also pick any 12-month period that ends in the tax year, so you capture the most costs.
This is a non-refundable credit. The Department of Finance estimates it will save Canadians about $2.37 billion in federal tax in 2026.
Keep all your receipts, even small ones. They add up faster than you’d think.
8. Canada Caregiver Credit
Maybe you help your mom with groceries and rent because a physical condition makes it hard for her to manage on her own. Or maybe your adult son lives with a mental health condition and relies on you. Either way, you may qualify for the Canada caregiver credit.
It covers more family members than most people expect: your spouse or partner, children, parents, grandparents, brothers and sisters, and even aunts, uncles, nieces and nephews. They don’t have to live with you, either. What matters is that they depend on you for basics like food, housing, or clothing.
So what’s it worth? For 2026, caring for an adult relative can lower your federal tax by up to about $1,228. If the person is your child under 18, the most you’d save is closer to $384. Keep in mind the credit shrinks once the person you care for earns more than about $20,600 a year.
Sharing the load with siblings? You can split the claim between you, as long as the total doesn’t go over the maximum for that person.
9. Home Buyers’ Amount
Just bought your first place? The home buyers’ amount can take a bit of the sting out of closing costs.
You can claim up to $10,000, and for 2026 that works out to as much as $1,400 off your federal tax. Think of it as help with things like legal fees and land transfer tax.
Here’s the catch with “first-time.” You don’t qualify if you or your spouse or partner lived in a home either of you owned at any point in the year you buy or the four years before. So if you sold a condo three years ago, you’d have to wait. You also need to plan to move in within a year of buying it.
Buying with a partner? You can split the claim any way you like, but together you can’t claim more than $10,000.
There’s one exception to the first-time rule. If you qualify for the Disability Tax Credit, or you buy a home for a family member who does, you can still claim it, as long as the new home is more accessible or better suited to their needs.
10. Charitable Donations Tax Credit
Money you give to Canadian registered charities can earn you a tax credit.
The more you give, the bigger the credit gets. For 2026, the federal credit is 14% on your first $200 in donations and 29% on anything over $200. Very high earners can get 33% on part of their donations. Your province or territory adds its own credit on top.
For example, if you donate $1,000 in 2026, you’d save about $260 in federal tax: $28 on the first $200 and $232 on the remaining $800.
Since the credit rate jumps after $200, it often pays to combine your donations with your spouse’s and claim them on one return. You can also save donations and claim them in any of the next five years.
Keep the official receipts the charity gives you. You’ll need them if the CRA asks.
Canadians are generous. The Department of Finance estimates this credit will save donors about $4.17 billion in federal tax in 2026.
Bonus: Canada Workers Benefit
The Canada Workers Benefit (CWB) is a refundable tax credit for people who work but earn a lower income. Because it’s refundable, you can get money back even if you don’t owe any tax.
For the 2025 tax year, single workers can get up to $1,633, and families can get up to $2,813. The amount gets smaller as your income goes up. It stops at $37,742 for singles and $49,393 for families. Amounts are different in Alberta, Quebec and Nunavut.
To qualify, you generally need to be 19 or older (or live with a spouse, partner or child), live in Canada all year, and earn income from a job or business. If you’re approved for the Disability Tax Credit, you may also get an extra disability supplement of up to $843.
You claim the CWB on your tax return using Schedule 6. If you got it last year, the CRA may pay up to half of it in advance, spread over three payments during the year.
How Do Tax Deductions Work in Canada?
So, how do tax deductions work in Canada? It helps to think of your taxes as a series of steps:
Your income → minus deductions → taxable income → tax is worked out → minus credits → what you owe (or your refund)
Here’s how that looks in real life. Say you earn $60,000 and put $5,000 into your RRSP. You’d pay tax on $55,000 instead of $60,000. Then your credits, like the basic personal amount every taxpayer gets, come off the tax that’s left.
Deductions come off first, so they lower your income before your tax rate is applied. That’s why getting them right matters, especially if you’re self-employed or have more than one source of income.
How to Claim Tax Deductions
Here’s how to claim tax deductions and credits, step by step:
- Check that you qualify. Each deduction and credit has its own rules, so read the CRA page for the ones you plan to claim.
- Work out how much you can claim. Watch for limits, like the RRSP maximum or the child care limits by age.
- Add it to your tax return. Most tax software will ask you about common deductions and credits and fill in the right lines for you.
- Keep your receipts. Hold on to them for six years in case the CRA asks to see them.
Most people need to file their 2026 tax return by April 30, 2027. If you’re self-employed, you have until June 15, 2027, but any tax you owe is still due April 30.
Missed a claim in a past year? You can ask the CRA to change your old returns, going back up to 10 years.
Not sure what you can claim? Our personal tax accountants will go through your income and expenses, find the deductions and credits that apply to you, and make sure they’re reported correctly.
Common Questions About Canadian Tax Credits and Deductions
Each deduction has its own rules and limits, but you can estimate your savings with one simple step: multiply the deduction by your tax rate. For example, a $2,000 deduction at a combined federal and provincial rate of 30% saves you about $600. The higher your income, the more a deduction saves you, since higher incomes are taxed at higher rates.
Start by filling out Part A of Form T2201, or apply online through your CRA My Account. Then have a medical practitioner, like your doctor, fill out Part B. Once the CRA reviews it, they’ll send you a letter with their decision. If you’re approved, you can also ask the CRA to update your returns for past years, which could mean a refund.
They’re amounts that lower the tax you owe. Non-refundable credits can bring your tax down to zero, but no further. Refundable credits, like the Canada Workers Benefit, can pay you money back even if you don’t owe any tax. Common credits cover things like disability, medical costs, caregiving, buying a first home, and donations to charity.
They’re amounts that lower the income you pay tax on. Because they come off before your tax is worked out, they save you money at your highest tax rate. Common examples include RRSP contributions, moving costs, child care, and business or work expenses. Each one has its own rules, so check that you qualify before you claim it.
Make the Most of Your Canadian Tax Credits and Deductions
Knowing a tax break exists is only half the job. The other half is making sure you claim it, and claim it correctly.
That gets harder when you have a lot going on, like running a business, saving in an RRSP, supporting family, or earning income from more than one place. It’s easy to miss a claim, or to make one the CRA later questions.
At Advanced Tax Services, our CPA team looks at your whole tax picture, not just one line at a time. We’ll find the credits and deductions that apply to you, check past years for anything you missed, and make sure your return is done right.
Speak with a CPA to find out which Canadian tax credits and deductions you could be claiming.
