Canada's tax system includes dozens of deductions and credits. Most Canadians claim only a handful — and miss hundreds or thousands of dollars in savings as a result. This guide covers the most impactful ones for the 2026 tax year.
A deduction reduces your taxable income before tax is calculated, saving you money at your marginal rate. A non-refundable credit reduces your tax owing at the lowest federal rate (15% federally). A refundable credit pays out even if your tax owing is zero.
1. RRSP Deduction
The RRSP is the single most powerful tax deduction available to most Canadians. Every dollar contributed directly reduces your taxable income — saving you money at your marginal rate. At the top federal bracket (33%), contributing $10,000 to your RRSP saves $3,300 in federal tax alone (plus provincial).
- Limit: 18% of prior year earned income, up to $31,560
- Unused room carries forward indefinitely
- Deadline: March 1, 2027 for the 2026 tax year
- Spouse contributions available for income-splitting
2. Basic Personal Amount (BPA)
Every Canadian receives this automatic credit — you don't need to claim it separately. It means your first $16,129 of income is effectively tax-free at the federal level. Provincial BPAs vary widely, from Ontario's ~$11,000 to Alberta's $21,003.
3. Capital Gains Inclusion Rate
Capital gains are not fully taxable — only a portion is "included" in income. In 2026, the inclusion rate is 50% on capital gains up to $250,000 per year for individuals (higher gains may be subject to the 2/3 inclusion rate for amounts above this threshold following 2024 federal proposals — check CRA for the current status).
This means a $50,000 gain on selling stock is only $25,000 of taxable income — effectively taxed at half your marginal rate. Use our Capital Gains Tax Calculator to see your exact bill.
4. Home Office Expenses
If you worked from home in 2026, you may be able to deduct a portion of your actual home expenses — rent, utilities, internet, office supplies, and maintenance costs — proportional to the space used for work.
- Your employer must complete Form T2200 confirming your work-from-home arrangement
- The workspace must be where you "principally" (more than 50% of the time) perform work, or used exclusively for work and for meeting clients
- Deductible portion = (office sq ft ÷ total sq ft) × eligible expenses
- Employees cannot deduct mortgage interest or capital cost allowance (those apply to self-employed)
5. Childcare Expense Deduction
Childcare costs (daycare, babysitter, day camps, overnight camps up to weekly limits) paid to allow both parents to work or study are deductible. Limits in 2026:
- $8,000 per child under age 7 at year-end
- $5,000 per child aged 7–16
- $11,000 per child with a severe disability
- Generally claimed by the lower-income spouse
6. Moving Expense Deduction
If you moved at least 40 km closer to a new work location or school, you can deduct eligible moving costs against employment or self-employment income earned at the new location. Eligible costs include moving company fees, travel and accommodation, storage, and certain lease-break costs.
7. Employment Expense Deduction
Employees required by their employer (confirmed on Form T2200) to pay certain work-related expenses out of pocket can deduct them. This includes tools, vehicle expenses for travel (not commuting), union dues, and professional memberships. Salaried employees are generally more restricted than commission salespeople.
8. Medical Expense Tax Credit
You can claim a 15% federal credit on eligible medical expenses above the lesser of $2,759 (2026 threshold) or 3% of your net income. The credit applies to any 12-month period ending in the tax year. Eligible expenses include prescriptions, dental, vision care, medical devices, private health insurance premiums, and many more.
Tip: If your spouse has a lower income, claim all family medical expenses on their return — their 3% threshold will be lower, giving you a larger deductible amount.
9. Charitable Donation Tax Credit
Donations to registered Canadian charities earn a federal credit of 15% on the first $200, and 29% (or 33% for top-bracket taxpayers) on amounts above $200. With the provincial supplement, effective credit rates can reach 46–53% depending on your province — often exceeding your marginal tax rate on the donated amount.
- Combine both spouses' donations on one return to maximize the 29%+ tier
- Donation limit: up to 75% of net income (100% in year of death)
- Unused donations carry forward up to 5 years
10. Canada Caregiver Credit
If you support a spouse, common-law partner, or dependant with a physical or mental infirmity, you may claim the Canada Caregiver Credit. The credit amount depends on the dependant's net income and phases out as their income rises.
11. Disability Tax Credit (DTC)
The DTC is one of the most valuable credits available — but you must be approved by the CRA first via Form T2201 signed by a medical practitioner. Once approved, the base amount of $9,872 results in a federal credit of ~$1,481. Unused amounts can be transferred to a supporting family member. The DTC also unlocks the Registered Disability Savings Plan (RDSP).
12. Canada Workers Benefit (CWB)
The CWB is a refundable credit designed for working Canadians with low income. Unlike non-refundable credits, it pays out even if you owe no tax. Advance payments are made quarterly throughout the year. The credit phases out as income rises above ~$23,000 (single) or ~$26,000 (families). Claim it on Schedule 6 of your return.
13. GST/HST Credit
Automatically calculated and paid quarterly to lower-income Canadians to offset the GST/HST you pay on purchases. You don't need to apply — filing a tax return is sufficient. The amount depends on your family net income and number of children. Payments are made in January, April, July, and October.
14. Canada Child Benefit (CCB)
The CCB provides monthly tax-free payments to families with children under 18. The maximum in 2026 is $7,787/year per child under 6, and $6,570/year per child aged 6–17. Benefits phase out starting at ~$36,502 of adjusted family net income. File your taxes every year even if you have no income to continue receiving CCB.
15. Interest on Student Loans
Interest paid on qualifying government student loans (Canada Student Loans, provincial student loans) earns a 15% federal credit. Note: interest on private student loans does not qualify. Unused credit amounts carry forward up to 5 years.
Credits for Seniors
| Credit | 2026 Amount | Notes |
|---|---|---|
| Age Amount | $8,790 | Age 65+, phases out above $42,335 net income |
| Pension Income Amount | Up to $2,000 | For eligible pension income (RRIF, employer pension, etc.) |
| OAS/CPP Amount | N/A | OAS/CPP are taxable income — not credits themselves |
| Home Accessibility Tax Credit | 15% on up to $20,000 | Eligible renovation expenses for seniors/disabled |
Self-Employed Deductions
If you're self-employed, you can deduct business expenses directly from self-employment income — a more powerful form of saving than credits. Key deductions include:
- Business use of vehicle — keep a mileage log; deduct business-use % of operating costs and CCA
- Business portion of home office — square footage allocation of rent/utilities/insurance
- Professional fees — accountant, lawyer, bookkeeping software
- Advertising and marketing — website, social media, ads
- Professional development — courses, conferences, subscriptions directly related to your business
- Health Spending Account (HSA) — through a corporation, medical costs become a deductible business expense
- CPP self-employed deduction — the employer's half of CPP premiums is fully deductible as a business expense
See your 2026 tax bill — with and without deductions
Enter your income and RRSP contributions in our calculator to see your exact federal and provincial tax.
This guide is for informational purposes only and does not constitute financial or tax advice. Tax rules are subject to change and individual circumstances vary. Consult a licensed CPA or tax professional for advice specific to your situation.