The Federal Budget: Navigating New Tax Measures and Strategic Updates
The federal budget for 2025-2026 was delivered on Nov. 4, 2025. The following are tax measures that will be of interest to our clients.
Reminder: Tax Cut Announced in May, 2025
This federal budget does not include any changes to the personal tax rates. However, in May, 2025, the federal government had already announced the reduction of the first bracket tax rate, from 15% to 14.5% in 2025, and then to 14% in 2026.
This measure is included in Bill C-4, currently before Parliament.
Personal Support Workers Tax Credit
The budget proposes to introduce a temporary Personal Support Workers Tax Credit, which would provide eligible personal support workers with a refundable tax credit of 5% of eligible earnings (up to $1,100 in savings).
This measure would apply only to the 2026 to 2030 taxation years.
New definitions come with this credit:
Eligible personal support worker: The person must ordinarily provide one-on-one care and essential support to optimize and maintain another individual’s health, well-being and safety. The person’s main employment duties must include helping patients with activities of daily living and mobilization.
Eligible health-care establishments: Include hospitals, nursing care facilities, residential care facilities, community care facilities for the elderly, home health care establishments, and other similar regulated health-care establishments.
Eligible earnings: Include taxable wages and employment benefits, as well as tax-exempt income earned on a reserve. Amounts earned in British Columbia, Newfoundland and Labrador and the Northwest Territories do NOT qualify.
Employers will be required to certify their employees’ eligible earnings. This will most likely be done through the T4 slip (to be confirmed).
Home Accessibility Tax Credit
The home accessibility tax credit is a non-refundable tax credit that applies at the lowest personal income tax rate on up to $20,000 of eligible home renovation per calendar year. Expenses must be incurred to improve the safety, accessibility or functionality of an eligible dwelling of a qualifying individual (aged 65 or older or eligible for the Disability Tax Credit).
Currently, some expenses can qualify for both the Home Accessibility Tax Credit and the Medical Expense Tax Credit.
Starting in 2026, the budget proposes to eliminate the possibility to claim both credits for the same expenses.
Canada Carbon Rebate – Last chance
With the removal of the federal fuel charges as of April 1, 2025, the government sent a final Canada Carbon Rebate (CCR) payment starting in April, 2025 to eligible households. The budget proposes that no CCR payments would be made in respect of tax returns, or adjustments requests, filed after Oct. 30, 2026.
In other words, for eligible households to receive their last CCR payment, they need to file their 2024 tax returns before Oct. 30, 2026.
Elimination of the Underused Housing Tax
The Underused Housing Tax (UHT) took effect on Jan. 1, 2022, and applies to certain owners of vacant or underused residential property in Canada, generally non-residents, non-Canadians.
The budget proposes to eliminate the UHT as of the 2025 calendar year. As a result, no UHT would be payable and no UHT returns would be required to be filed in respect of the 2025 and subsequent calendar years. UHT returns still need to be filed for the 2022 to 2024 calendar years.
H&R Block | 613-938-6239 | andrea.fitzgerald@hrblock.ca
