Canadian Tax Deductions
Learn which expenses can reduce taxable income and which Canadian tax deductions may apply to your situation.
The short version
- A deduction lowers your income before tax is calculated, so it saves tax at your marginal rate.
- At $80,000 of income in most provinces, a $1,000 deduction saves roughly $300 or more. A $1,000 credit saves $140 federally plus your province's share.
- Deductions also lower your net income, which can raise your Canada Child Benefit and Canada Groceries and Essentials Benefit and cut the Old Age Security clawback.
- The big ones: RRSP, FHSA, child care, moving, union dues, support payments and work expenses.
Canadian Tax Deductions: What Can You Actually Deduct?
Here's the bad news first: you can't deduct your groceries, your commute or the new truck “because you use it for work sometimes.” Canada is stingier with personal deductions than most people hope. The good news: the deductions that do exist are valuable, and plenty of people miss the ones they qualify for.
| Deduction (return line) | Who and how much |
|---|---|
| RRSP contributions (20800) | Up to your RRSP room: 18% of last year's earned income, to a maximum of $33,810 for 2026, minus any pension adjustment, plus unused room. Contributions up to March 1, 2027 count for 2026. Try the RRSP tax savings calculator. |
| FHSA contributions (20805) | First Home Savings Account: up to $8,000 a year and $40,000 for life, with up to $8,000 of unused room carried forward. Deductible going in, tax-free coming out for a qualifying first home. |
| Child care expenses (21400) | Up to $8,000 per child under 7, $5,000 per child aged 7 to 16, and $11,000 for a child eligible for the disability tax credit. Usually claimed by the lower-income parent. |
| Union and professional dues (21200) | Dues for a union or a professional body you must belong to for your job. Usually in box 44 of your T4. |
| Moving expenses (21900) | If you moved at least 40 km closer to a new job, business or full-time school. Claimed on form T1-M against income earned at the new location. |
| Support payments (22000) | Spousal support paid under a written agreement or court order. Child support under agreements made after April 1997 is generally not deductible. |
| Carrying charges and interest (22100) | Interest on money borrowed to earn investment or business income, and certain investment fees. Not interest on your mortgage for your own home. |
| Enhanced CPP contributions (22215) | The “enhanced” part of CPP and all of CPP2 taken off your pay is a deduction, not a credit. Software and our calculators handle it automatically. |
| Employment expenses (22900) | Only if your employer signs form T2200 confirming you had to pay them, such as home office costs, vehicle use or supplies. Commuting never counts. |
| Business and rental expenses | Deducted on form T2125 or T776 against that income, not here. See the self-employed tax calculator and our guide to selling a rental property. |
Not sure if your expense is deductible?
Describe it in a sentence. The assistant tells you whether it is a deduction, a credit or neither, which line it goes on, and the CRA rule behind it.
Deduction or Credit? Why It Matters
A deduction comes off your income, so it saves tax at your marginal rate, the rate on your last dollar. A non-refundable credit comes off your tax, usually at 14% federally in 2026, whatever you earn. That's why an RRSP contribution is worth more to a high earner than to someone in the lowest bracket, while a credit like the basic personal amount is worth the same to both. Our page on Canadian tax credits covers the other side, and the 2026 tax brackets show your marginal rate.
Five Deduction Mistakes CRA Catches
- Home office as an employee without a T2200. Since 2023 there's no flat-rate shortcut; you need the form and the receipts (see what tax receipts to keep).
- Moving expenses for a move that wasn't 40 km closer to the new job or school. CRA checks the distance.
- Child care claimed by the higher-income parent when the rules say the lower-income one should claim it.
- Child support deducted because it felt like it should be.
- RRSP over-contributions beyond your room plus the $2,000 buffer. The excess is taxed at 1% a month until you take it out.
Moving expenses and “other deductions” are both on CRA's list of most-adjusted lines. Check your return before you file. Got a review letter about one of these? The tax document analyzer tells you exactly what CRA wants to see.
Deductions That Change Your Benefits Too
CRA calculates the Canada Child Benefit, the Canada Groceries and Essentials Benefit (formerly the GST/HST credit) and the Old Age Security clawback from net income. So a deduction doesn't just cut your tax, it can raise your benefits. For a family in the benefit phase-out range, an RRSP or FHSA contribution can be worth noticeably more than the tax saving alone. See how it fits together in our Canadian income tax guide.
Tax Deduction Questions
What is the RRSP deduction limit for 2026?
18% of your previous year's earned income, up to $33,810, minus any pension adjustment, plus unused room carried forward. Your exact room is on your latest notice of assessment and in My Account.
How much child care can I deduct?
Up to $8,000 per child under 7, $5,000 per child aged 7 to 16, and $11,000 for a child eligible for the disability tax credit, generally claimed by the lower-income spouse and limited to two-thirds of earned income.
Can employees deduct home office expenses?
Only with a signed T2200 from the employer and receipts for eligible costs. The temporary flat-rate method ended after 2022.
Is my mortgage interest deductible in Canada?
Not on your own home. Interest can be deductible when the money was borrowed to earn rental, business or investment income.
Can I deduct my commute to work?
No. Travel between home and a regular workplace is personal, even if it is long.
Sources: CRA, Indexation table; RRSP and TFSA limits; Contributing to your FHSA; Line 21400 child care expenses and form T778. Checked October 2026. The “$300 on $1,000” example assumes a combined marginal rate of about 30%; yours may be higher or lower.
Last reviewed October 4, 2026 against CRA and Government of Canada sources. How we check our facts.