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A tax deduction comes off your income before any tax is worked out, so it saves you tax at your top rate. Put $5,000 into an RRSP and deduct it, and on $80,000 of income the calculator here shows about $1,480 less tax in Ontario and about $1,520 less in Alberta. The same $5,000 at $50,000 of income saves about $1,100 in either province.
Which tax deductions can most people claim?
The CRA lists every deduction by line number on its return. Most people only ever touch three or four of them. If you contribute to an RRSP, pay union dues, pay for child care so you can work, or pay support to a former partner, you’re already in the club.
Here are the ones people ask about most, with the line where they go on the T1 return.
| Line | Deduction (CRA wording) |
|---|---|
| 20800 | RRSP deduction |
| 20805 | FHSA deduction |
| 21200 | Annual union, professional or like dues |
| 21400 | Child care expenses |
| 21500 | Disability supports deduction |
| 21900 | Moving expenses |
| 22000 | Support payments made |
| 22100 | Carrying charges, interest expenses and other expenses |
| 22900 | Other employment expenses |
| 23200 | Other deductions |
Each line has its own conditions, and the CRA page for that line is the place to read them. We haven’t repeated eligibility rules here because they change and they’re long.
Is a deduction the same as a credit?
No, and mixing them up is the most common mistake on this topic. A deduction shrinks your taxable income. A credit is worked out at the lowest bracket rate and then taken off the tax itself.
So $1,000 of deduction is worth $200 to $300 if you’re in a middle bracket, and a bit more if you’re higher up. A $1,000 credit amount is worth $140 federally, because the federal credit rate for 2026 is 14%, plus whatever your province adds. If you want to see how the credits stack up, the tax credits calculator covers the federal ones.
There’s no flat standard deduction in the Canadian system. What every filer gets instead is the basic personal amount, and that works as a credit, not a deduction.
How much does a $5,000 deduction save?
We ran the same $5,000 RRSP deduction through the income tax calculator at two salaries.
| Income before deduction | Tax saved, Ontario | Tax saved, Alberta |
|---|---|---|
| $50,000 | $1,103 | $1,100 |
| $80,000 | $1,483 | $1,525 |
These are federal plus provincial income tax with basic credits only. CPP and EI aren’t affected by an RRSP deduction, and the estimate leaves out benefits that shrink as income rises. Your own refund will differ, and by more than you’d guess if you have other credits in play.
The gap between the two rows is the point. The higher your income, the more each deducted dollar is worth, which is why an RRSP tends to pay off best in your higher earning years. To see the exact rate on your next dollar, use the marginal tax rate calculator. Set the amount you’d deduct in the RRSP calculator if you want to see what it grows into.
As a percentage, the saving is about 22% of the deduction at $50,000 (1,103 out of 5,000) and about 30% at $80,000 (1,483 out of 5,000). Put another way, a smaller deduction does scale: $1,000 at $80,000 in Ontario would save roughly a fifth of that $1,483, or about $297, as long as you stay inside the same bracket.
How much RRSP room do you have?
Your limit is the lesser of 18% of last year’s earned income and the annual dollar limit. The dollar limit is $32,490 for 2025 and $33,810 for 2026. Your own limit may be lower, so look at the deduction limit printed on your latest notice of assessment before you contribute.
Money paid in during the first 60 days after year end can go on the earlier year’s return. For 2025 that window closed on March 2, 2026. The FHSA has its own line (20805) and works the same way, deduction now and tax-free withdrawal for a first home later. You can see the effect with the FHSA calculator.
What goes wrong with deductions?
Forgetting the paperwork is the big one. Keep receipts and slips for anything you deduct, since the CRA can ask to see them.
Claiming a personal expense in the wrong place is next. Home internet isn’t automatically an employment expense, and a moving deduction has distance and job conditions. Read the line page before you type a number.
Then there’s timing. You don’t have to deduct an RRSP contribution in the year you make it. If you’re in a low bracket this year and expect a raise, carrying the deduction forward can be smarter, and your notice of assessment lists the unused contributions you can still deduct on line 20800.
The estimates above don’t include self-employed expenses, which follow other rules. The self-employed tax calculator lowers income tax when you enter deductions, but note that it doesn’t lower CPP and it leaves EI out.
A tidy way to keep track through the year
Make one folder, paper or digital, and drop in every slip as it arrives: the RRSP receipt, the union dues total on your T4, the child care receipts from the provider. At tax time you’ll go through one pile, not twenty emails. It takes five minutes a month and saves an evening in spring.
The sources behind this page
Line numbers and names come from the Canada Revenue Agency‘s list of deductions, credits and expenses. The RRSP limit and the 60 day rule come from the CRA’s RRSP contribution page. Tax rates and brackets are the 2026 federal and provincial figures our calculators use, taken from CRA and provincial pages. No level of government runs or endorses this site.
Frequently asked questions
What is the difference between a tax deduction and a tax credit?
A deduction lowers your taxable income before tax is worked out. A credit is calculated at a set rate and subtracted from the tax you owe.
Where do I claim an RRSP deduction?
On line 20800 of your return. Your deduction limit is on your latest notice of assessment.
Can I deduct RRSP money in a later year?
Yes. You can contribute now and claim the deduction in a later year. Your notice of assessment shows what's unused.
Do deductions lower CPP or EI?
Not the way they lower income tax. Our self-employed calculator applies deductions to income tax only, and it leaves EI out.
Do I need receipts for deductions?
Keep them. The CRA can ask you to back up a claim, and a deduction you can't support may be reversed.
- 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