Tax-saving options compared for 2026
How the main legal ways to lower personal income tax in Canada work, who they suit and what to watch for.
This table compares types of tax-saving tools, not financial products or providers. The right mix depends on your marginal rate now and later, whether you are buying a first home, whether you have a spouse with lower income, and which income-tested benefits you receive. Read each row with the linked guide before acting. Limits shown are the 2026 figures published by the CRA.
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| Option | How it lowers tax | 2026 limit or key rule | Good for | Watch out for |
|---|---|---|---|---|
| RRSP contribution | Deduction now; withdrawals taxed later | 18% of 2025 earned income up to $33,810, minus pension adjustment, plus unused room | Higher earners who expect a lower rate in retirement | Withdrawals are fully taxable; over-contributions above $2,000 cost 1% a month |
| TFSA | No deduction; growth and withdrawals tax-free | $7,000 new room for 2026; withdrawals added back next January | Most savers, especially at lower incomes or for flexible goals | Over-contributions cost 1% a month on the highest excess; no $2,000 buffer |
| FHSA | Deduction now and tax-free qualifying withdrawal | $8,000 a year, $40,000 lifetime, up to $8,000 carried forward | First-time home buyers | Account must close within 15 years or by the end of the year you turn 71; non-qualifying withdrawals are taxed |
| Pension income splitting | Moves up to 50% of eligible pension income to a spouse | Joint election on Form T1032 each year | Retired couples with unequal pensions | Under 65, RRIF and annuity income usually does not qualify; can affect OAS recovery for both |
| Spousal RRSP | Higher earner deducts; lower-income spouse is taxed on withdrawal | Uses the contributor's RRSP room | Couples expecting unequal retirement income | Withdrawals within about three years of a contribution can be taxed back to the contributor |
| Capital loss harvesting | Realized losses offset gains | Net capital losses carry back 3 years or forward indefinitely | Investors with gains in non-registered accounts | Superficial loss rule if the same property is bought back within 30 days |
| Charitable donations | Non-refundable credit, higher rate above $200 | Generally up to 75% of net income | Regular donors; couples can pool receipts | Only receipts from registered charities count |
| Child care expense deduction | Deduction, usually claimed by the lower-income spouse | Annual caps per child depend on age and disability | Working parents paying daycare or camps | Receipts must show provider details; Quebec uses a refundable credit instead |
| Medical expense credit | Non-refundable credit on costs above a threshold | Above the lesser of $2,890 or 3% of net income (2026) | Families with large dental, drug or therapy costs | Choose the best 12-month period; often better claimed by the lower-income spouse |
Amounts are taken from the CRA's 2026 indexation and registered plan limits pages and may be revised. Rules have exceptions not shown here, and Quebec applies its own rules on the provincial return. Before acting, check the CRA indexation page, the RRSP and TFSA limits page and, in Quebec, Revenu Québec. This is general information, not tax or investment advice.