What is the Personal Support Workers Tax Credit?
Budget 2025 proposes a temporary five-year refundable tax credit specifically for personal support workers (PSWs) in eligible health care establishments. It would allow qualifying PSWs to claim 5 % of their eligible earnings, up to $1,100 annually. (canada.ca)
Who qualifies and for which provinces?
To be eligible, individuals must be employed in health care establishments not covered by existing federal–province wage-increase agreements for PSWs (such as BC, Newfoundland & Labrador, and Northwest Territories) (canada.ca). Eligible health care settings include hospitals, nursing care facilities, residential care, home health care, and community care for elderly persons. PSWs must perform one-on-one care duties: assisting with activities of daily living and mobilization, as directed by a regulated health professional or comparable organization. (budget.canada.ca)
When does this apply?
- The credit is proposed for taxation years 2026 through 2030. (canada.ca)
- Legislation (Notice of Ways and Means Motion) would amend the Income Tax Act accordingly once passed. (budget.canada.ca)
How much can you save?
Here’s a quick breakdown if you’re potentially eligible:
| Annual PSW income | 5% Credit Rate | Credit Amount | Conditions |
|---|---|---|---|
| $15,000 | 5% | $750 | Must be eligible establishment & duties |
| $22,000 | 5% | $1,100 (cap) | Maximum credit reached |
| $25,000 | 5% | $1,100 | Same cap applies |
The credit is refundable, meaning even if you owe little or no federal tax, you can still receive or carry forward the full amount. (budget.canada.ca)
Tax Planning Tips and Challenges
- Timing: Since this applies starting in 2026, PSWs should ensure excellent record-keeping for eligible earnings during the relevant years. Keep employer certifications if required. (budget.canada.ca)
- Income & Location Matters: If your province has a federal wage-increase agreement, you might not qualify. Double-check your provincial status.
- Refundability: Because the credit is refundable, even low-income workers will benefit — unlike non-refundable credits.
- Tax Return Preparation: You'll likely need to claim this on your annual return; ensure forms include sections for this new credit. Keep documentation of employment and duties.
Example Scenario
Sara works in a home care setting in Ontario, not under a federal agreement, as a PSW. In 2026 she earns $24,000 in eligible earnings. She’s eligible, so she gets 5% × $24,000 = $1,200, but since the credit caps at $1,100, she receives $1,100. Even though she has $800 of tax payable, she gets the full $1,100 refund or offset. If she owed $0, she still receives the full credit as a refund.
What’s Next? Legislative Status
At Budget Day (November 4, 2025), the measure was proposed via a Notice of Ways and Means Motion to amend the Income Tax Act and Regulations. It remains pending legislation. (budget.canada.ca)
If you're a personal support worker or considering that career path, this is a big change. When the legislation is passed, you may be able to use this credit retroactively for taxation years 2026-2030. Be ready with records, know your province’s status, and consult a tax professional to incorporate this into your tax plans effectively.