A $5,000 RRSP deduction takes $1,483 off the federal and Ontario tax of someone earning $85,000. Add medical costs, tuition or donations in the boxes below and you’ll see what each claim saves on top of that.
Why is a deduction worth more than a credit?
A deduction shrinks the income that gets taxed, so it saves at your marginal rate. A credit works differently. The tool multiplies the amount by the lowest federal rate, 14%, and takes the result off the tax bill, a rate the CRA’s 2026 tax rates and income brackets page gives for the first $58,523 of taxable income. At $85,000 in Ontario, $1,000 of deduction saves about $297, while $1,000 of credit amount saves $140.
So the type of claim matters far more than the order you make it in. At this income an RRSP deduction is worth roughly twice a tuition claim, dollar for dollar: about 30 cents against 14. One more thing to know is that credits can’t push federal tax below zero in this tool.
Which federal amounts does the tool use?
| Item | Amount in the tool |
|---|---|
| Age amount, 65 or older | $9,208, cut by 15% of net income over $46,432 |
| Pension income amount | Up to $2,000 |
| Disability amount | $10,341 |
| Medical expenses | Costs above the lesser of $2,890 or 3% of net income |
| First home amount | $10,000 |
| Donations | 14% of the first $200, 29% above that |
What do the savings look like on $85,000 in Ontario?
Before any claim the tax is $15,551. The RRSP deduction alone brings it to $14,069, so you save $1,483.
Now add $6,000 of medical costs and $1,000 of donations. Net income comes to $80,000, 3% of that is $2,400, and the medical claim is therefore $3,600. Federal credits used are $766 and the total saving is $2,249.
Tuition of $8,000 makes $1,120 of credit, for $2,603 saved in all.
A 65 year old with $10,000 of pension income has $6,173 of credit amounts, because the age amount shrinks to $4,173 at that $80,000 net income. Federal credits used are $864 and the total saved is $2,347. A first home buyer with no RRSP saves $1,400, and donations of $500 with nothing else save $117.
How does a medical claim actually work?
Picture Dana in Kitchener, who spends $6,000 on dental work and glasses in a year and has $80,000 of net income. The first $2,400 (3% of income, the lower of the two limits) is Dana’s to absorb, and the remaining $3,600 is the claim. At 14% that’s $504 off federal tax. Keep the receipts together until tax time, because the CRA lets you pick any 12-month period that ends in the tax year, so you can choose the stretch that holds the most costs. The CRA’s list of eligible medical expenses says what counts.
What does the tool leave out?
- Your province gives credits too, at its own amounts, so your true saving is higher.
- Credits that aren’t refundable can’t lower federal tax below zero.
- Spouse, child and carried forward amounts go in the other credit amounts box. Donations you don’t use this year can be carried forward for up to five years, and the yearly claim is capped at 75% of net income.
- Every claim is treated as usable in full, which only holds if you have enough federal tax to absorb it.
For anything not listed, use the other credit amounts box in the income tax calculator.
What should I check next?
How much a deduction saves depends on your bracket, and the marginal tax rate calculator shows yours. Once your claims are settled, the tax refund calculator turns them into a refund figure. Plenty of people who could claim the disability amount never check if they qualify, and the disability tax credit calculator answers that question before you fill in the box, which is worth doing since the amount is $10,341.
Where these amounts come from
The age, pension, disability and medical figures are 2026 amounts on Canada.ca, last checked on 29 September 2026, and the CRA’s home buyers’ amount page shows the same $10,000. The donation rates are the ones listed in the table above, so treat them as the tool’s own settings. We aren’t a government service and we don’t speak for one.
About this calculator
- What it does
- See how much tax an RRSP deduction, medical costs, donations, tuition and federal credits can save.
- Category
- Income Tax
- Last checked
- September 30, 2026
- Result type
- Estimate for information only, not tax advice.
Frequently asked questions
What's the difference between a deduction and a credit?
A deduction lowers taxable income and saves tax at your marginal rate. A federal credit saves 14% of the amount claimed.
How much does a $5,000 RRSP deduction save?
At $85,000 of pay in Ontario it saves $1,483, taking the tax bill from $15,551 to $14,069.
How are medical expenses counted?
Only the part above the lesser of $2,890 or 3% of net income counts. With $80,000 of net income and $6,000 of costs, your claim is $3,600.
Do provincial credits count?
No. The tool uses federal credits only, and your province adds more at its own amounts.
What happens if my credits are bigger than my tax?
Credits that aren't refundable can't take federal tax below zero, so the extra is lost in this tool.
Sources and updates
Updated: . How we check rates · Editorial team · Updates