What’s New in the Tax Credit for Personal Support Workers?
Budget 2025 introduces a temporary 5-year refundable tax credit for eligible Personal Support Workers (PSWs). The credit will be equal to 5% of their eligible earnings, up to $1,100 per year, for taxation years 2026 through 2030. It will be available in provinces and territories not covered by existing wage-increase bilateral agreements. (canada.ca)
Who is Eligible?
To qualify, individuals must:
- Work for an eligible health care establishment—hospitals, nursing care, residential care or community care facilities, home health care, etc. (budget.canada.ca)
- Provide one-on-one care and essential support (assisting with activities of daily living and mobilization) as directed by a regulated professional or community health organization. (budget.canada.ca)
- Meet certification or documentation requirements as set out by their employer. (budget.canada.ca)
Practical Tax Planning Steps
- Check provincial wage agreements: Since PSWs in provinces with wage-increase bilateral agreements are excluded, it’s crucial to verify whether your province is eligible. (canada.ca)
- Employer certifications: Ensure your employer provides the required certification for eligibility. Without this, your earnings may not count. (budget.canada.ca)
- Estimate your earnings: Since the credit is 5% of eligible earnings up to $1,100, you’ll need to earn at least $22,000 in eligible PSW income to maximize the credit. Less income means proportionally less credit.
- Time your income: Because the credit applies from 2026 to 2030, any pay or contracts spanning years close to these thresholds need careful planning.
Example Scenario
Julia is a PSW in Ontario (no wage agreement) working for a home health care establishment. In 2026 she earns $25,000 of eligible income. Her 5% credit yields $1,250, but since there’s a cap of $1,100, she claims the maximum $1,100.
What This Means Long-Term
- Over the five-year span, this policy supports PSWs who often work low-wage, essential roles, helping to improve retention and financial security.
- The refundable nature ensures that even PSWs with low or zero tax payable can benefit.
- It may encourage employers and health-care institutions in non-covered provinces to advocate for wage agreements or negotiate eligibility.
Key Takeaway
If you're a PSW or working with PSWs:
- Confirm if your province is covered by a wage agreement.
- Make sure your employer provides proper certification.
- Use 2026-2030 to plan around this credit—2026 will be your first claim year.
- Keep good records of your eligible income and duties performed.
This credit is a welcome recognition; using it wisely can help PSWs reduce their tax burden and increase after-tax income.