Tax deductions in Canada and the credits that sit beside them

What is the difference between a tax credit and a tax deduction?

A tax deduction lowers your taxable income, while a tax credit lowers the tax calculated on that income. Tax deductions in Canada are subtracted before the tax brackets are applied, so a $1,000 deduction saves $1,000 multiplied by your highest marginal rate. A non-refundable credit is multiplied by the lowest federal rate, which is 14% for the 2026 tax year (CRA, current-year tax rates).

That difference decides which claims are worth the most to you. A deduction is worth more the higher your income, because each dollar comes off the top bracket. A non-refundable credit is worth the same percentage to almost everyone who owes tax, but it cannot create a refund on its own.

A worked comparison on a $5,000 claim

Take someone with 2026 taxable income of $90,000, which puts their top federal bracket at 20.5% (the band from $58,523.01 to $117,045). A $5,000 RRSP deduction cuts their federal tax by $1,025 ($5,000 x 20.5%). A $5,000 non-refundable credit amount, such as eligible medical expenses above the threshold, cuts federal tax by $700 ($5,000 x 14%). Provincial tax falls as well in both cases, at the province's own rates.

What tax credits can I claim in Canada?

Everyone who files gets the basic personal amount on line 30000, which is $16,452 for 2026 at net incomes up to $181,440 (CRA, T4127 January 2026). Most other tax credits in Canada depend on your circumstances: your age, your job, who you support, a disability, schooling, a home purchase or out-of-pocket health costs. Tax software asks screening questions for each one, but it only knows what you tell it.

Each of the larger claims has its own guide. The medical expenses tax credit explains the 3% threshold and the 12-month window. The tuition tax credit covers transfers to a parent and carryforwards. The Canada caregiver credit covers support for an infirm spouse, child, parent or other relative, and the home buyers' amount covers the $10,000 claim in the year you buy. The charitable donation tax credit explains the two federal rates on line 34900 and why couples should put all their receipts on one return.

Two claims for housing and disability overlap with others. The disability tax credit needs an approved Form T2201 before you can claim it, and the home accessibility tax credit covers renovations that make a home safer or easier to use for a senior or a person eligible for the DTC.

What expenses are tax deductible in Canada?

Only expenses that the Income Tax Act lists are deductible for individuals; everyday living costs such as rent, groceries or a personal car are not. The common tax write-offs for employees and families are retirement savings contributions, child care, union dues, eligible moving costs and some work-from-home costs. Self-employed people deduct business expenses separately on Form T2125 before their net business income reaches the return.

Parents should read our child care expenses deduction guide for the per-child limits and the rule that the lower-income spouse usually claims. Moving costs have their own rules on distance and timing; see moving expenses tax deduction. Home office costs for employees now need the detailed method with a signed Form T2200, covered in work-from-home expenses. Couples where one person has pension income should read pension income splitting, because the deduction on line 21000 moves income to the lower-taxed spouse.

Why net income on line 23600 matters

Deductions taken before line 23600 lower your net income, which the CRA uses to test benefits and several credits. A lower net income on line 23600 can raise the Canada Child Benefit, reduce the medical expense threshold and reduce any clawback of Old Age Security. Credits do not change net income at all.

Which tax credits are refundable in Canada?

A refundable credit is paid to you even if you owe no tax, while a non-refundable credit can only reduce tax to zero. Most federal credits, including all the amounts in the table above, are non-refundable. Refundable amounts are claimed near the end of the return, after tax has been worked out.

• Refundable medical expense supplement (line 45200): for working adults with low income and high medical costs. For 2025 you needed working income of $4,390 or more and adjusted family net income under $63,374.
• Canada workers benefit (line 45300): for low-income workers; up to $1,665 for a single person and $2,869 for a family for 2026, calculated on Schedule 6.
• Multigenerational home renovation tax credit (line 45355): 14.5% for 2025 of up to $50,000 spent creating a self-contained secondary unit so a senior or an adult eligible for the DTC can live with a relative.
• Personal support workers tax credit: a refundable credit for 2026 to 2030 equal to the lesser of $1,100 and 5% of eligible pay. Proposed in Budget 2025, it became law when Bill C-15 received Royal Assent on March 26, 2026.
• Benefits paid outside the return: the GST/HST credit and Canada Child Benefit are not claimed on a line, but the CRA only pays them if you file.

Tax write-offs in Canada that people often miss

The claims most often left off a return are the ones no slip reports. Employers send a T4 and schools send a T2202, but nobody sends a slip for a dental bill, a parent you support or the first home you bought. Walk through this list before you file.

If you find a missed claim after filing, you do not need to file a new return. Use Change my return in My Account, ReFILE through certified software, or Form T1-ADJ, Adjustment Request. The CRA then sends a notice of reassessment.

What receipts should I keep for tax deductions and credits?

Keep every receipt, slip and signed form that supports a claim, even though you do not send them with a return you file online. The CRA can ask for proof in a pre-assessment review or a later processing review. Generally, keep records for six years from the end of the tax year they relate to.

1. Store slips (T4, T4A, T5, T2202, RRSP and FHSA receipts) in one folder per tax year as they arrive in January and February.
2. Save medical receipts that show the patient, the provider's name, the date and the amount paid; pharmacy printouts for the year are accepted.
3. Keep signed statements that the CRA may request: Form T2200 for work from home, a medical practitioner's note for the caregiver amount, and Form T2201 approval for the DTC.
4. Keep the purchase agreement and land registry document for a home purchase, and moving invoices with dates and addresses.
5. When the CRA sends a review letter, answer by the date on it and upload copies through My Account rather than mailing originals.

If a review letter arrives, reply by its deadline. A claim the CRA cannot verify is removed and the tax is reassessed, so a missing receipt costs you the credit even when the expense was real.

Credits and deductions for the 2026 tax year and the 2027 season

Returns for 2026 are due April 30, 2027 for most people, and 2026 is the first full year at the 14% lowest federal rate. The CRA's 2026 indexation table already sets most dollar amounts for 2026 credits: the medical expense threshold is $2,890, the caregiver amount for an infirm dependant 18 or older is up to $8,773 and the disability amount is $10,341. The 2027 amounts are not yet published; the CRA usually releases them in November.

Since the 2026 tax year, the same expense can no longer be claimed under both the medical expense credit and the home accessibility credit; the change became law when Bill C-15 received Royal Assent on March 26, 2026. Plan renovation claims with that rule in mind.