How to Reduce Your Personal Taxes in Canada: 2026 Strategies

The most reliable ways to reduce your personal taxes in Canada are to use registered accounts, claim every deduction and credit you qualify for, split income with family where the rules allow, and keep investment and business income tax-efficient. None of it relies on loopholes. It is using the rules as written, on time.

Here is what each strategy is worth for the 2026 tax year, with the current limits and the deadlines between now and April 30, 2027. The figures are federal and Ontario, so they fit Ottawa residents, but most apply anywhere in Canada.

Table of Contents

1. Deductions, credits and your marginal rate
2. Use registered accounts first
3. Deductions people miss
4. Credits worth claiming for 2026
5. Split income with your family
6. Keep investment income tax-efficient
7. If you are self-employed or own a business
8. Key dates for your 2026 taxes
9. How BBA Tax helps
10. Frequently Asked Questions

Deductions, credits and your marginal rate

A deduction reduces your taxable income, so it saves tax at your highest (marginal) rate. Most credits reduce your tax directly at the lowest federal rate, so they are worth about the same at any income.

For 2026, federal tax starts at 14% on taxable income up to $58,523 and reaches 33% above $258,482. Ontario’s rates run from 5.05% to 13.16%, plus a surtax at higher incomes. That is why a $1,000 deduction is worth far more to someone earning $150,000 than to someone earning $40,000. Our page on Canadian tax rates and limits for 2026 lists every bracket.

Ontario residents also get the basic personal amounts automatically: up to $16,452 federally (less at very high incomes) and $12,989 for Ontario in 2026. The strategies below go beyond those.

Use registered accounts first

Registered accounts are the simplest tax savers: the CRA publishes the limits, and the rules are straightforward once you know your room.

• RRSP. Contributions are deductible. The 2026 limit is 18% of your 2025 earned income, up to $33,810, minus any pension adjustment, plus unused room. Contributions made by March 1, 2027 can be deducted on your 2026 return.
• TFSA. No deduction, but growth and withdrawals are tax-free. The 2026 limit is $7,000, and unused room carries forward.
• FHSA. For first-time home buyers. Contributions are deductible and qualifying withdrawals for a first home are tax-free. The limits are $8,000 a year and $40,000 for life, and up to $8,000 of unused room carries forward once you have opened an account.
• Home Buyers’ Plan. You can withdraw up to $60,000 from your RRSPs toward a qualifying home. For first withdrawals made from 2026 to 2028, repayments start in the fifth year after the withdrawal instead of the second.

Which account to fund first depends on your bracket now and later; our RRSP vs TFSA guide walks through it.

Deductions people miss

These deductions are easy to leave off a return:

• Child care expenses. Generally claimed by the spouse with the lower net income, with exceptions, such as when that spouse was enrolled in an eligible educational program.
• Moving expenses. If you moved for a new job, a new business location or full-time post-secondary studies, and your new home is at least 40 km closer to it.
• Employment expenses, including a home office. Employees who are required to work from home can claim some costs using the detailed method and a T2200 signed by their employer. Our guide to home office expenses covers the rules.
• Labour Mobility Deduction. For 2026, the annual limit for eligible tradespeople who temporarily relocate for work rises from $4,000 to $10,000, and the temporary lodging now only has to be 120 km closer to the work site than your home (down from 150 km).
• Carrying charges. Interest on money borrowed to earn investment income such as interest or dividends is generally deductible, but not if the investment can only produce capital gains.

Credits worth claiming for 2026

Credits reduce your tax directly, and several are easy to miss or to claim on the wrong spouse’s return.

• Canada employment amount. Up to $1,501 if you have employment income.
• Medical expenses. You can claim eligible expenses for any 12-month period ending in 2026 that you did not claim for 2025. Federally, only the amount above the lesser of 3% of net income or $2,890 counts (Ontario’s threshold is $2,940). Either spouse can claim the family’s expenses, and it may be better for the spouse with the lower net income to do it.
• Donations. Federally, the first $200 of gifts in a year earns a credit at the lowest rate (14% for 2026), and the rest earns 29%, or 33% on the part that matches income in the top bracket. Either spouse can claim the couple’s donations, you can claim up to 75% of net income, and unused donations carry forward five years. Pooling donations on one return gets more of them above the $200 mark.
• Personal Support Workers Tax Credit. New for 2026 to 2030: eligible personal support workers can get a refundable credit of up to $1,100 a year (5% of eligible earnings), certified by the employer on the T4. Work done in British Columbia, Newfoundland and Labrador, and the Northwest Territories does not qualify.
• Disability, caregiver and tuition credits. These depend on your family’s situation, so check whether you or a family member qualifies.

Split income with your family

If one spouse earns much more than the other, moving income to the lower earner can cut the family’s total tax. The main tools for 2026 are:

• pension income splitting of up to 50% of eligible pension income (CPP and OAS do not qualify);
• a spousal RRSP, which gives the higher earner the deduction and the lower earner the retirement income;
• a prescribed-rate loan at 3% for loans made from October 1 to December 31, 2026, with the interest paid by January 30 each year; and
• a reasonable salary to a spouse or child for real work in your business.

Simply giving money to a spouse or minor child usually does not work, because the attribution rules tax the income back to you. Our guide to income splitting in Canada covers each option and the TOSI rules for family dividends.

Keep investment income tax-efficient

How your investment income is taxed depends on its type and where you hold it.

• Capital gains. Only half of a capital gain is taxable in 2026. The proposed increase to two-thirds was cancelled.
• Canadian dividends and interest. Dividends from Canadian corporations get the dividend tax credit, while interest is fully taxable.
• Tax-loss selling. Selling investments at a loss can offset capital gains, but the superficial loss rule denies the loss if you, your spouse or a corporation either of you controls buys the same or identical property within 30 days before or after the sale and still owns it 30 days after.
• Selling a business. The lifetime capital gains exemption can shelter up to $1,275,000 of gains on qualified small business corporation shares in 2026. See our guide to the lifetime capital gains exemption.

Where you hold each type of investment (RRSP, TFSA or a taxable account) can change your tax, so review it with your advisor when you rebalance.

If you are self-employed or own a business

Self-employed people deduct reasonable business expenses on Form T2125, including a share of home costs when the home office is the principal place of business, or is used only for the business and for regular client meetings. Keep receipts and a log for any vehicle you use for work.

Incorporating can lower the tax on profits you leave in the business: an Ontario CCPC pays a combined 11.2% on its first $500,000 of active business income from July 1, 2026. Most of that benefit is a deferral, because you pay personal tax when you take the money out as salary or dividends. Our guide to corporate tax rates in Canada explains the numbers.

Key dates for your 2026 taxes

Most tax-saving moves for 2026 have to happen by December 31. Here are the dates that follow:

Filing late when you owe tax costs 5% of the balance plus 1% for each full month late, up to 12 months, and the CRA charges daily compound interest on unpaid amounts (7% for October to December 2026). File even if you had little or no income, because benefits depend on your return.

How BBA Tax helps

BBA Tax prepares personal tax returns for individuals, families and self-employed people in Ottawa, and remotely across Canada. We claim the deductions and credits you’re entitled to, coordinate claims between spouses, and represent you if the CRA reviews your return later. Learn more about our personal tax services or our accounting for self-employed individuals.

Frequently Asked Questions

What is the easiest way to lower my taxes for 2026?

If you have RRSP or FHSA room, a contribution is often the simplest step, because it reduces your taxable income at your marginal rate and you control the amount. After that, make sure you claim the deductions and credits you qualify for, such as child care, medical expenses and donations, and coordinate them with your spouse.

Is a tax deduction better than a tax credit?

Neither is always better. A deduction reduces taxable income, so it is worth more at higher incomes: in the 20.5% federal bracket, a $1,000 deduction saves $205 of federal tax. Most non-refundable credits are calculated at the lowest federal rate, 14% for 2026, so they are worth about the same at any income, as long as you owe tax.

Can I claim my spouse’s medical expenses or donations?

Yes. Either spouse can claim the family’s eligible medical expenses, and the CRA notes it may be better for the spouse with the lower net income to claim them because of the 3% threshold. For donations, either spouse can claim the couple’s gifts, and putting them on one return gets more of the total above the $200 mark.

What is the deadline for 2026 tax moves?

Most moves, including charitable donations, have to happen by December 31, 2026. RRSP contributions for 2026 can be made until March 1, 2027. Your return and any balance owing are due April 30, 2027; if you or your spouse are self-employed, you can file until June 15, 2027, but any balance is still due April 30.

Do I have to file if I had little or no income?

There is no tax to pay, but you should still file. Benefits such as the Canada Groceries and Essentials Benefit, which replaced the GST/HST credit in July 2026, are based on your return, and the CRA says you need to file every year, even with no income, to keep receiving benefits and credits.