Commonly missed 2025 tax credits and deductions
Credits reduce tax directly. Deductions reduce taxable income — their value depends on your marginal rate. Both are worth claiming.
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The difference between a credit and a deduction
A deduction reduces your taxable income before tax is calculated. Its value scales with your marginal rate: a $5,000 RRSP deduction saves $2,150 at a 43% combined marginal rate, but only $1,000 at 20%. Higher earners benefit more from deductions.
A non-refundable tax credit reduces taxes owing directly at a fixed rate — typically 15% federal. A $1,000 credit saves $150 in federal tax regardless of your income. Excess non-refundable credits cannot produce a refund; they reduce taxes to zero and stop there.
A refundable credit (like the GST/HST credit) is paid out in full even if you owe no tax. These are the most valuable for lower-income Canadians.
Non-refundable credits for 2025
Basic Personal Amount (BPA)
Every Canadian resident receives a federal BPA of $15,705 for 2025. This amount is converted to a credit at the 15% federal rate, saving $2,356 in federal tax. The 2025 BPA is at 15% (the rate cut to 14% takes effect in 2026 only). Claimed automatically on your T1 — no action required.
Canada Caregiver Credit
Available if you support a spouse, common-law partner, or dependent with a physical or mental impairment. The credit for an infirm dependent (other than spouse) is up to $7,999 for 2025 and phases out as the dependent's income rises. The spousal/partner amount has an additional infirmity supplement. Claimed on Schedule 5.
Disability Tax Credit (DTC)
For individuals with severe and prolonged physical or mental impairments. The federal base amount for 2025 is $9,872. Requires prior CRA approval via Form T2201. Unused portions can be transferred to a supporting person. Must be claimed on Schedule 1.
Age Amount
For taxpayers 65 or older at December 31, 2025. The federal amount is $8,396 for 2025, phasing out when net income exceeds $42,335 and fully eliminated above $98,309. Claimed on Schedule 1, line 30100.
Pension Income Amount
Up to $2,000 of eligible pension income (RRIF, annuities, defined benefit pension) qualifies for a credit at 15%, saving up to $300 in federal tax. OAS and CPP do not qualify as eligible pension income for this credit. Claimed on Schedule 1, line 31400.
Tuition Tax Credit
Students can claim eligible tuition fees paid in 2025 as a non-refundable credit at 15%. Unused portions can be carried forward or transferred to a parent, grandparent, or spouse — up to a lifetime transfer limit of $5,000. Requires a T2202 from your educational institution.
First-Time Home Buyers' Tax Credit
If you purchased a qualifying home in 2025 and neither you nor your spouse owned a principal residence in any of the preceding four years, you can claim $10,000 on line 31270, producing a $1,500 federal credit (at 15%). Claimed on Schedule 1.
Home Accessibility Tax Credit
For qualifying renovation costs that improve accessibility for a senior or person with a disability. The credit applies to up to $20,000 of eligible expenses, producing up to $3,000 in federal credit. Claimed on Schedule 1, line 31285. Keep all receipts.
Refundable credits for 2025
GST/HST Credit
A quarterly refundable credit to offset GST/HST paid by lower- and modest-income Canadians. The amount depends on your 2025 net income and family size. You receive it automatically by filing your T1 — no separate application. Delivered quarterly starting July 2026 based on your 2025 return.
Canada Child Benefit (CCB)
A monthly tax-free payment for families with children under 18. Calculated on 2025 adjusted family net income; new amounts take effect July 2026. Both parents must file their 2025 returns for CCB to be calculated correctly. Late filing can interrupt payments.
Canada Workers Benefit (CWB)
A refundable credit for low-income workers (not self-employed) with earned income above a minimum threshold. For 2025, the basic CWB phases out at approximately $33,000 (single) or $43,000 (families). Advance CWB payments were issued during 2025; the final amount is reconciled on your T1. Claimed on Schedule 6.
Climate Action Incentive Payment (CAIP)
Available only to residents of Ontario, Manitoba, Saskatchewan, and Alberta — provinces under the federal carbon pricing backstop. Delivered quarterly via direct deposit. The amount depends on your province and family size. No action required beyond filing your T1.
Commonly missed deductions for 2025
Childcare Expenses
Deductible from the income of the lower-income spouse in almost all cases. The 2025 limits are $8,000 per child under 7 and $5,000 per child ages 7–16. Eligible expenses include daycare, babysitters, day camps, boarding schools, and before/after-school care. Keep all receipts — CRA may request them. Claimed on Form T778.
Employment Expenses (T2200)
Salaried and commission employees required by their employer to pay certain expenses without reimbursement can deduct them on Form T777. Eligible expenses include home office costs, vehicle use, supplies, and certain professional dues. Requires a signed T2200 from your employer before filing.
Moving Expenses
Deductible if you moved at least 40 kilometres closer to a new place of work or school and earned income at the new location in 2025. Eligible costs include moving truck, travel, temporary accommodation, and storage. Deduction is limited to net income earned at the new location. Claimed on Form T1-M.
Union and Professional Dues
Annual dues paid to professional associations and unions required for employment are deductible from income. Claimed on line 21200 of the T1. Often auto-populated from your T4 (box 44) but verify the amount is correct and include any additional dues not reflected on the slip.
Investment Expenses
Interest paid on money borrowed to earn investment income (other than tax shelters), and investment counsel fees paid to manage a non-registered portfolio, are deductible. Claimed on line 22100. Note: fees inside registered accounts (RRSP, TFSA) are not deductible.
Northern Residents Deduction
For residents who lived in a prescribed northern zone for at least six consecutive months beginning or ending in 2025. Includes all of Yukon, Northwest Territories, and Nunavut, plus many remote northern communities in other provinces. The residency deduction is $11/day for the northern zone (up to $4,015 for a full year). A travel deduction is also available for up to two trips per year. Claimed on Form T2222.
Provincial credits not listed here: Ontario Trillium Benefit, BC Climate Action Tax Credit (cancelled 2025), Alberta Child Benefit, Quebec Solidarity Credit, Manitoba Home Affordability Tax Credit, and others are administered provincially. Refer to your province's tax agency for amounts and eligibility.
Common mistakes
Mistake
Missing the childcare deduction because of the spousal rule
The lower-income spouse must claim childcare expenses in almost all cases. Both parents claiming, or the higher earner claiming, is a CRA audit flag and will be disallowed.
Mistake
Not claiming DTC due to the application barrier
The Disability Tax Credit requires prior CRA approval via Form T2201 — you cannot self-declare. Many eligible Canadians never apply. Once approved, retroactive claims can go back 10 years.
Mistake
Forgetting the Northern Residents Deduction
Residents of Yukon, Northwest Territories, Nunavut, and many other prescribed zones qualify for a deduction worth up to $4,015/year for 2025. It is easy to overlook for first-year northern residents.
Quick wins
Quick win
Apply for the DTC now if a dependent has a disability
Once CRA approves Form T2201, the credit can be carried back 10 years and assigned to a supporting person. The retroactive tax recovery is often significant.
Quick win
Donate securities instead of cash
Capital gains on publicly listed securities donated directly to a registered charity are taxed at zero. You still receive a donation receipt for the full fair market value — a double benefit over donating cash proceeds from a sale.
FAQ's
What's the difference between a tax credit and a deduction?
A deduction reduces your taxable income — so its value depends on your marginal rate. A $5,000 RRSP deduction at a 43% marginal rate saves $2,150 in tax; the same deduction at 20% saves $1,000. A non-refundable tax credit reduces tax owing directly at a fixed rate (usually 15% federal) — so a $1,000 credit saves you $150 regardless of your income. Refundable credits (like the GST/HST credit) can produce a refund even if you owe no tax at all.Can I claim childcare if my children are in school?
Yes, for before- and after-school care, daycare, day camps, and boarding schools for children under 16. The lower-income spouse must claim the deduction in most cases — this is the most commonly missed rule. The 2025 limits are $8,000 per child under 7 and $5,000 per child ages 7–16. Overnight camps and language school fees count up to weekly limits. Keep all receipts — CRA may ask for them.How do I apply for the Disability Tax Credit?
The Disability Tax Credit (DTC) requires prior CRA approval — you can't just claim it on your return without it. Have a qualified medical practitioner complete Form T2201 and submit it to CRA. Approval is valid for a set period (or indefinitely for permanent conditions). Once approved, you can claim the credit retroactively for up to 10 years and transfer unused portions to a supporting person. Apply as early as possible — retroactive claims can recover significant tax.Are Quebec residents eligible for the Climate Action Incentive Payment?
No. The Climate Action Incentive Payment (CAIP) is only available to residents of provinces under the federal carbon pricing backstop: Ontario, Manitoba, Saskatchewan, and Alberta for 2025. Quebec, BC, and other provinces that have their own provincial carbon pricing systems do not receive the federal CAIP. Quebec residents had their own provincial carbon pricing credits; BC had the Climate Action Tax Credit, which was cancelled in April 2025 when federal consumer carbon pricing ended.