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Income tax deductions come off your income before tax is worked out, so each one saves money at your top rate. For an Ontario worker earning $90,000, $12,000 of deductions cuts federal and Ontario income tax by $3,558, about 29.65 cents on the dollar. Credits behave differently, and knowing which is which tells you what to check first.
What’s the difference between a deduction and a credit?
A deduction is subtracted from income first, and the saving grows with your marginal rate, so a higher earner gains more. A credit is subtracted from the tax bill itself. Most federal credits are worth 14% of the amount in 2026, so a $1,000 credit amount saves $140 in federal tax. Your province adds its own credit on top, and the tax deductions and credits calculator leaves that out.
Which income tax deductions can you claim?
| Deduction | Rule |
|---|---|
| RRSP or FHSA contribution | Room is 18% of last year’s earned income up to $33,810 for 2026, minus any pension adjustment |
| Moving (line 21900) | New home at least 40 km closer to new work or full-time school |
| Union and professional dues (line 21200) | Annual dues only, not initiation fees or licences |
| Child care (line 21400) | Paid so you could earn income, study or do research; use form T778 |
| Carrying charges (line 22100) | Investment management fees and interest on money borrowed to earn investment income |
| Employment expenses (line 22900) | Most claims need form T2200 from your employer |
How much does a $12,000 deduction save?
Take employment income of $90,000. With no deductions the calculator shows $17,034 of tax. Add a $10,000 RRSP contribution and $2,000 of other deductions and tax falls to $13,476. You keep $3,558.
Credits are a different sum. Enter $1,000 of credit amounts and the calculator shows $140 saved. The $12,000 of deductions saved far more, because deductions save at your marginal rate and this credit saves 14%. So compare claims by the dollars they save, not by the size of the amount.
The RRSP tax savings calculator sets the contribution against your room. Your marginal tax rate tells you what each extra deduction is worth at your income.
Income matters too. The same $5,000 RRSP contribution saves $1,482.50 at $90,000 in Ontario, which is 29.65 cents on the dollar. At $50,000 it saves $1,102.50, or 22.05 cents. So the lower earner gets less back for the same deposit. That doesn’t make the RRSP a bad idea, but run both incomes through the calculator before you choose how much to put in. Unused room isn’t lost either. It carries forward, so a small deposit this year doesn’t shut the door. Just don’t forget the room is yours to track, and the CRA notice of assessment shows your figure.
Which deductions do people miss?
Moving costs are one. They can include selling costs for the old home and legal fees on the new one, though the deduction is limited to income earned at the new location, and unused amounts carry forward.
Carrying charges cover reasonable preparation fees if you have business or property income. Employees generally can’t claim tax preparation fees. And if you’re self-employed, a self-employed tax calculator shows how business expenses lower tax and CPP together.
Where do claims go wrong?
- Claiming union dues twice. Use box 44 of the T4 or the receipt, not both.
- Deducting interest on money borrowed to buy an RRSP or TFSA. The CRA doesn’t allow it.
- Going over RRSP room. Our data shows a $2,000 buffer, then a 1% monthly penalty on the excess.
- Claiming brokerage commissions as a deduction. They belong in the capital gain calculation.
- Missing the contribution deadline. For the 2025 tax year it was March 2, 2026, and the 2026 date isn’t printed yet.
The calculator counts only the fields it shows. Provincial credits, surtaxes and income-tested benefits are left out, so your return may differ.
Where the numbers come from
Rules come from Canada Revenue Agency pages for lines 21200, 21900, 22100 and 22900, and its deductions overview, read in September 2026. The RRSP limit and buffer are from CRA data compiled for this site, and tax rates from 2026 federal and Ontario schedules. This site has no link with the CRA or any government.
Frequently asked questions
How do deductions and credits differ?
Deductions come off income and save tax at your marginal rate. Federal credits come off the tax and save 14% of the amount.
How much does a $10,000 RRSP contribution save?
For $90,000 of income in Ontario, $10,000 plus $2,000 of other deductions saves $3,558 in tax.
What's the RRSP limit for 2026?
Up to $33,810, capped at 18% of the prior year's earnings and reduced by any pension adjustment.
Can an employee deduct tax preparation fees?
For most employees, no. The CRA says they aren't claimable as an employment expense, though commission employees may claim reasonable accounting fees.
Which moving costs can I deduct?
Your new home must be at least 40 km closer to new work or full-time school. The deduction applies against income earned at the new location.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.