Compliance
Temporary Tax Relief for Canada’s Personal Support Workers: What to Know
In Budget 2025, a new refundable credit offers personal support workers up to CAD 1,100 per year—starting in 2026. Here’s who qualifies, how to claim it, and how to maximize the benefit.
By NomadicTax Research Team • 5-8 min read • November 24, 2025
## Background: Why This Credit Matters
Personal support workers (PSWs) are essential to long-term care, home care, and community services—but many work modest income hours and lack benefits. Recognizing this, **Budget 2025** proposes a **temporary refundable tax credit** to provide extra support.([canada.ca](https://www.canada.ca/en/department-finance/news/2025/10/budget-2025-to-invest-in-canadian-workers.html?utm_source=openai))
## Key Features of the PSW Tax Credit
- Effective for **tax years 2026 through 2030**.([canada.ca](https://www.canada.ca/en/department-finance/news/2025/10/budget-2025-to-invest-in-canadian-workers.html?utm_source=openai))
- Refundable tax credit equal to **5 % of eligible earnings**, up to **CAD 1,100/year**.([canada.ca](https://www.canada.ca/en/department-finance/news/2025/10/budget-2025-to-invest-in-canadian-workers.html?utm_source=openai))
- Only available in **provinces/territories not already covered** by bilateral agreements that increase PSW wages under existing arrangements. For example, BC, NL, and NW Territories already have bilateral support and are excluded.([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## Who Qualifies
- Must be an **eligible personal support worker**:
- Provides **one-on-one care and essential support** in daily living and mobility;
- Duties directed by regulated health professionals or provincial/community organizations.([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- Must work in **eligible health care establishments**: hospitals, nursing care, residential care facilities, home care, community care for elderly, etc.([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- All taxable employment income and related benefits are included when calculating eligible earnings.([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## How to Claim & Plan Ahead
- Even though the credit is **proposed**, you should track earnings in advance (2026-2030), with documentation of employer, workplace type, job description. Keeping records of care-related hours, pay statements, and contracts will help.
- When filing your tax return for 2026 onward, PSWs will need to fill in the relevant schedule—details will be published once legislation completes.
- If you live somewhere with provincial wage funding (bilateral agreement), this won’t apply—but check local sources; sometimes additional top-ups are available.
## Example Scenario
- Maria is a PSW in Alberta (which does *not* have a bilateral wage agreement) earning **CAD 40,000 in 2026** from eligible work. She qualifies for:
- 5 % × 40,000 = **CAD 2,000**, but capped at **CAD 1,100**. So she claims **CAD 1,100**, reducing her net federal tax payable or increasing her refund.
- If she earns **CAD 20,000** instead, 5 % × 20,000 = **CAD 1,000**, fully eligible (below cap).
## Caveats & Strategic Thoughts
- Confirm whether your employer counts as an **eligible establishment**.
- Projecting income ahead: if you expect sharp income changes, think about front-loading or smoothing income to concentrate earning in years where you can fully employ this credit.
- Stay tuned: legislation must pass. Implementation timing matters—if delayed, savings shift.
## Key Takeaways
This PSW tax credit is a concrete step by the Government of Canada to support a critical workforce. If eligible, you have a powerful tool to reduce tax payable or boost refunds—**ensure you document your income**, verify your employer setting, and plan for the new rate structure before tax years 2026-2030.