Compliance
Maximizing Canadian Non-Refundable Tax Credits After the 2025-26 Middle-Class Tax Cut
How the recent reduction of Canada’s lowest federal personal income tax rate impacts non-refundable tax credits — and what you can do to ensure you aren’t disadvantaged.
By NomadicTax Research Team • 5-8 min read • June 17, 2026
## What’s changed for tax credits
In **Bill C-4 (Making Life More Affordable for Canadians Act)**, the lowest federal marginal income tax rate was lowered from **15 % to 14.5 % for the 2025 taxation year**, and further down to **14 % starting in 2026**. ([canada.ca](https://www.canada.ca/en/department-finance/services/publications/report-impact-reducing-lowest-marginal-personal-income-tax-rate-non-refundable-tax-credits.html?utm_source=openai))
Non-refundable tax credits (like the Basic Personal Amount, Disability Credit, Tuition, etc.) are valued by multiplying the claimable amount by the lowest tax rate. For instance, a $1,000 credit under the 15 % rate yields $150; under 14 %, it yields $140. So lower rates mean a smaller tax benefit per dollar of credit. ([canada.ca](https://www.canada.ca/en/department-finance/services/publications/report-impact-reducing-lowest-marginal-personal-income-tax-rate-non-refundable-tax-credits.html?utm_source=openai))
## Introducing the Top-Up Tax Credit
To ensure that this rate cut doesn’t leave anyone worse off, the government passed **Bill C-15**, which provides a *Top-Up Tax Credit* for individuals whose non-refundable tax credits exceed the first income tax bracket threshold (for 2026, that’s **$58,523** in taxable income). This ensures amounts above that threshold are effectively credited at the old 15 % rate. ([canada.ca](https://www.canada.ca/en/department-finance/corporate/transparency/briefing-materials/2026/c15-eng.html?utm_source=openai))