Maximize Savings with Canada’s New Personal Support Workers Tax Credit

What is the Personal Support Workers (PSWs) Tax Credit?

The federal government’s Budget 2025 proposes a temporary tax credit specifically for personal support workers employed in provinces or territories not covered by wage support bilateral agreements. Eligible PSWs will be able to claim a refundable tax credit of 5% of their eligible income, up to a maximum of $1,100 per year.(budget.canada.ca)

Who is Eligible?

To benefit from this credit, you must meet all of the following:

• Be a personal support worker, performing hands-on assistance to clients in home care, long-term care, or similar settings(canada.ca)
• Be employed in a province or territory that does not already have a bilateral agreement with the federal government for raising wages for PSWs.(canada.ca)
• File taxes in the years 2026 through 2030—this is a temporary measure.(canada.ca)

How Much Can You Save?

• 5% of eligible income up to $1,100/year.
  • For example, if your eligible PSW earnings are $20,000, 5% is $1,000, so you’d get $1,000 back.
  • If you earned $25,000, 5% gives $1,250—but the credit caps at $1,100.(canada.ca)
• Since it’s refundable, even if you owe no tax, you could receive this amount as a benefit. Excellent for part-time PSWs or casual workers in eligible regions.

Actionable Steps to Claim the Credit

1. Keep records: save your pay stubs or employer statements to show PSW income in provinces without wage agreements.
2. Check your provincial status: if your region has submitted a bilateral agreement already—you may not be eligible.
3. Report income properly: declare your eligible PSW income on your tax return for 2026 onward.
4. Watch for CRA’s form updates: federal return forms will include this credit when claiming begins.CRA guidance will clarify eligible provinces.(canada.ca)

Caveats & Key Considerations

• Temporary credit: only applicable 2026–2030.
• Income jurisdiction matters: could lose eligibility if your province signs an agreement later.
• Interplay with other programs: may work alongside other wage supports—tax planning is key.

Tailoring Tax Planning If You’re A PSW

• If you work across multiple provinces, track your hours and wages per province.
• If you’re contract-based, ask if your contractor wages can qualify (depends on work details).
• Use the credit when projecting income—factor this into your expected tax refund or liability.

Why This Matters

With labour shortages in health sectors, this credit not only recognizes the critical role of PSWs, but also injects cash relief for those delivering essential care in under-supported areas. It’s also an income-based tool to reduce provincial wage disparities.

Budget 2025’s PSWs Tax Credit is part of a larger affordability agenda. Together with the middle-class tax rate reduction and first-time homebuyers’ GST relief, it's designed to give Canadians more breathing room. Include this credit in your future tax planning—it may again shift if your province enters an agreement.