Tax Planning
Maximize Savings with Canada’s New Personal Support Workers Tax Credit
Canada’s Budget 2025 introduces a **refundable tax credit** supporting PSWs, offering up to **$1,100/year** for eligible workers—here’s how to qualify and use it.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## 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](https://www.budget.canada.ca/2025/report-rapport/chap3-en.html?utm_source=openai))
## 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](https://www.canada.ca/en/innovation-science-economic-development/news/2025/11/minister-valdez-highlights-budget-2025-investment-in-personal-support-workers-and-skilled-professionals.html?utm_source=openai))
- 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](https://www.canada.ca/en/innovation-science-economic-development/news/2025/11/minister-valdez-highlights-budget-2025-investment-in-personal-support-workers-and-skilled-professionals.html?utm_source=openai))
- File taxes in the years **2026 through 2030**—this is a temporary measure.([canada.ca](https://www.canada.ca/en/innovation-science-economic-development/news/2025/11/minister-valdez-highlights-budget-2025-investment-in-personal-support-workers-and-skilled-professionals.html?utm_source=openai))
## 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](https://www.canada.ca/en/innovation-science-economic-development/news/2025/11/minister-valdez-highlights-budget-2025-investment-in-personal-support-workers-and-skilled-professionals.html?utm_source=openai))
- 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](https://www.canada.ca/en/department-finance/news/2025/10/budget-2025-to-invest-in-canadian-workers.html?utm_source=openai))
## 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.