Popular Canadian tax credits and deductions (2025)

While tax season isn’t until the end of the year, there are some benefits to planning ahead, including having a clearer idea of whether you will owe tax or get a refund. One of the best ways to plan ahead is to be aware of the tax deductions and credits you may qualify for.

We’ve rounded up some popular options for 2025 to help investors try to maximize their tax savings.

Tax deductions vs. tax credits

So what’s the difference between a tax deduction and a tax credit, anyway? Both can help lower the amount of tax you might have to pay, but they go about it differently.

Deductions work to lower your taxable income, so less of your earnings are subject to tax in the first place, potentially dropping you into a lower tax bracket.

Tax credits, by comparison, reduce the amount of tax you pay, potentially lowering your tax bill. There are two types of tax credits: refundable and non-refundable. Refundable credits are paid out even if you don’t owe any income tax. Non-refundable tax credits, however, can only be used to offset income tax you owe. While non-refundable tax credits can reduce your tax bill to zero, they won’t result in a tax refund.

Popular tax deductions in Canada

Registered Retirement Savings Plan (RRSP) contributions

RRSP contributions are arguably the best-known tax deduction. But it’s important to remember there’s a limit on how much you can contribute each year. For 2025, the contribution limit is $32,490, or 18% of your income earned the previous year, whichever is less. That said, unused contribution room carries over, so you may be able to contribute more if you haven’t maxed out your available contribution room from previous years. Although you can make contributions at any time, the deadline to be able to apply those tax deductions to your previous year’s earnings is typically 60 days after the end of the calendar year. The contribution deadline for the 2025 tax year is March 2, 2026.

First Home Savings Account (FHSA)

The FHSA is a registered account that allows first-time homebuyers to save money that can be put toward building or buying a home. The contribution room for an FHSA is $8,000 per year, with a lifetime contribution limit of $40,000. Remember, you don’t start earning contribution room until an FHSA account is opened. These contributions work like RRSPs, by lowering your taxable income, and unused contribution room also carries over to the next year, with maximum annual contributions of $16,000. Unlike RRSPs, qualifying withdrawals from an FHSA to purchase a first home are tax-free and the contribution deadline is December 31. 

Investment expenses

Did you borrow money to buy investments inside a taxable account (meaning outside an RRSP or a TFSA)? If so, the interest you paid on those loans can be deducted from your taxable income, as long as it’s used to try to earn investment income such as dividends or interest. There’s a caveat: if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid. This depends on your province (i.e., Quebec has special rules). 

Home office expenses

If you work from home, there are certain expenses you can deduct, such as your home internet and a portion of your utilities. To make a claim, you’ll need to complete Form T777 or Form T777S, and your employer will also have to fill out a form, Form T2200 or Form T2200S.

Notable tax credits

There are dozens of potential tax credits that can help you reduce your taxes, like those related to moving expenses or childcare. Here are just a few of the more common ones to highlight their potential.

First-Time Home Buyers’ Tax Credit (HBTC)

If you bought your first home in 2025, you could receive up to $1,500 through this non-refundable credit.

Multigenerational Home Renovation Tax Credit (MHRTC)

If you renovated your home to build a secondary unit to house someone over the age of 65 or an individual between 18 and 64 with a disability who is eligible for the disability tax credit, you could receive this refundable tax credit. Those who qualify can claim up to 15% on certain costs of up to $50,000.

Canada Training Credit

If you’re between 26 and 65 and spent money on training fees this year, you may qualify for this refundable tax credit. The credit accumulates at a rate of $250 per year, up to a lifetime limit of $5,000.

Federal Political Contribution Tax Credit

Did you or your spouse contribute to a registered federal political party, registered association or candidate in a federal election in 2025? You could claim up to $650 through this non-refundable credit. The provinces have separate tax credits for political contributions.

Medical Expense Tax Credit (METC)

If you paid for any medical expenses out-of-pocket this year, you may want to hold on to your receipts. You can claim some of them (there are more than 100 expenses that qualify) on your tax return with this non-refundable tax credit. Examples include ambulance service, prescription drugs, cancer treatment and hearing aids.

Calculating your tax bill

Wondering what your tax bill might look like for the 2025 tax year? Fidelity’s tax calculator quickly estimates your year-end balance based on your total income and deductions. The calculator is updated annually after income tax rates are updated (usually in late January or early February).

Note that these are the federal rules. Provinces can have their own rules with different amounts and nuances; talk to your financial advisor for more clarity on tax credits and deductions.