Updated Checked by the Tax-Services.ca editorial team How we check
Tax credits cut the tax you owe by a fixed percentage of an amount, and the federal rate for most of them in 2026 is 14%. So a $5,000 tuition claim saves $700 of federal tax, while a $5,000 RRSP deduction saves $1,482.50 on an $85,000 salary in Ontario. Same $5,000, very different result.
What’s the difference between a credit and a deduction?
A deduction comes off your income before tax is worked out. Its value is your marginal rate, federal and provincial together, so it grows as you earn more. A credit comes off the tax itself, at one fixed rate, whatever you earn.
That’s why an RRSP deduction pays more to a high earner, while a tuition credit pays the same to everybody, from a student on a summer wage to a senior manager. Picture Priya, who earns $85,000, and her nephew Dev, who made $9,000 at a summer job. Both claim $5,000 of tuition. Both get the same 14% on paper, though Dev may not have enough tax to use it all (more on that below). Our tax deductions and credits calculator shows both side by side.
What is a credit worth in dollars?
We ran an Ontario employee with $85,000 of employment income, who would pay $15,551.05 in income tax with nothing claimed. Then we added one item at a time.
| What you claim | Type | Tax saved |
|---|---|---|
| $5,000 RRSP contribution | Deduction | $1,482.50 |
| $1,000 in donations | Credit, 14% then 29% | $260.00 |
| $5,000 of tuition | Credit at 14% | $700.00 |
| $3,000 of medical costs | Credit on the excess | $63.00 |
The medical line looks small because you only claim what’s above a threshold, the lesser of $2,890 and 3% of your net income. At $85,000 that’s $2,550, so only $450 counts, and 14% of $450 is $63. Keep every receipt anyway. In a year with surgery, dental work or a long course of treatment, the amount above the threshold can be several thousand dollars, and at 14% that turns into real money on the return. For reference, the CRA’s page on eligible medical expenses uses the same “lesser of” test, with $2,834 as the figure for the 2025 return.
One more thing on donations. Our calculator pays 14% on the first $200, which is the lowest federal rate in 2026, and 29% above it. The CRA donations page has the current figures, so check it before you count on a big donation credit.
Which credits do most people miss?
Plenty.
The list is longer than you’d guess. The CRA’s own page mentions the disability tax credit, the Canada training credit on line 45350 and medical expenses on lines 33099 to 33199. Beyond those, think about donations you made in past years and haven’t claimed, tuition carried forward from school, and childcare, which is a deduction, not a credit.
A good habit at tax time: before you file, walk through last year’s return and this year’s slips and ask what changed. A new baby, a move for work, a parent who now lives with you, a year of big dental bills. Each of those can open a claim you didn’t have before.
Some claims can move between spouses or partners. It often pays to run the return both ways and compare. Software will do that, and so will a preparer, and you can check the result against the income tax calculator.
Where do credits stop working?
Most federal credits here are non-refundable in our model. They can wipe out your federal tax but not push it below zero, so a student with little income may not use a whole tuition claim in one year. Some unused amounts can be carried forward, and you have to ask for that on the return.
Other limits catch people out:
- The tool covers federal credits only. Your province adds its own, at its own amounts, so the true saving is bigger.
- We didn’t confirm the home buyers’ amount or the donation credit rates on a CRA page for 2026, so treat those two as estimates.
- Benefits like the GST/HST credit are paid separately and aren’t part of these numbers.
What about the RRSP? That’s a deduction, and the RRSP calculator looks at what it grows into.
How much would my own credits save?
Do a quick ballpark. Multiply each credit amount by 14%, then add what your province gives on top. If the total is more than your federal tax, the extra goes unused this year unless it can be carried forward or shared with a spouse. Receipts you can’t find are the usual reason people leave a few hundred bucks on the table.
Sources, and how we checked them
The 14% lowest federal rate and the 2026 bracket tables are from the CRA‘s tax rates page. The medical threshold of $2,890, the 3% test and the basic amounts come from the CRA’s 2026 indexation tables. The dollar results in the table are our calculator’s output for the case above. This site is independent and isn’t part of the CRA or any government.
Frequently asked questions
Is a tax credit better than a deduction?
Not always. A credit saves a fixed 14% federally, while a deduction saves your marginal rate, so a deduction wins for higher earners.
What does non-refundable mean?
The credit can reduce your tax to zero but the leftover isn't paid to you. Some unused amounts carry forward.
Are donations a credit or a deduction?
A credit. Our calculator uses 15% on the first $200 and 29% above that, which we didn't confirm on a CRA page for 2026.
Does the calculator include provincial credits?
No. It counts federal credits only, so the real saving is higher.
Where do I claim them?
On the return, in the credits section, using your slips and receipts. Tax software asks the questions for you.
- Canadian tax credits and government benefits explained
The difference between tax credits and benefits in Canada, how they're worked out from your return, and the calculators for the ones people claim most