Canada Federal Budget Personal Tax Updates: Key Credits, Filing, and Registered Plan Changes

by | Feb 23, 2026 | Blogs | 0 comments

Each federal budget brings a mix of new tax measures and technical updates that can be difficult to interpret without context. To help our clients stay informed, we’ve outlined the key personal tax changes that may affect workers, families, and individual taxpayers.

This overview covers new refundable credits, automatic filing proposals, registered plan reforms, and trust and compliance updates. As always, the actual impact will depend on your individual situation, so we encourage you to reach out if you’d like guidance tailored to your circumstances.

Personable Tax Measures

New Refundable Credit for Personal Support Workers

  • New refundable credit for eligible personal support workers: 5% of eligible earnings, up to $1,100/year.
  • Applies to 2026–2030 tax years.
  • Eligibility depends on:
    • Doing hands-on one-on-one care and activities of daily living/mobilization
    • Working for eligible establishments (hospitals, nursing/residential/community care, home health care, etc.)
  • BC, NL, and NWT earnings excluded (separate wage agreements).
  • Employers must certify eligible earnings.
  • Must file a tax return to receive it.

Automatic tax filing for lower-income individuals

  • CRA would be allowed to file a return on someone’s behalf if they meet strict criteria (very low taxable income, income slips on file, history of non-filing, etc.).
  • CRA sends the person the information first; they have 90 days to confirm or correct.
  • People can opt out.
  • Applies to 2025 and later tax years (so filing could begin in 2026).
  • Government asked for feedback by Jan 30, 2026.

Top-Up Tax Credit (non-refundable)

  • Middle-class tax cut lowers the first personal rate (15% → 14.5% in 2025; 14% from 2026).
  • In rare cases, the lower rate could reduce the value of large non-refundable credits more than the rate cut helps.
  • New Top-Up credit keeps 15% value on non-refundable credits above the first bracket threshold.
  • Applies 2025–2030.

Trusts – 21-year rule anti-avoidance

  • Expands rules to stop planning that avoids the 21-year deemed disposition through indirect transfers to new trusts.
  • Applies to transfers on or after Budget Day.

Canada Carbon Rebate wind-down

  • Since the federal fuel charge ended April 1, 2025, there was a final CCR payment starting April 2025.
  • No CCR payments for returns/adjustments filed after Oct 30, 2026.

Home Accessibility Tax Credit coordination

  • Same renovation expense cannot be claimed twice:
    • Applies 2026+.
    • If claimed under the Medical Expense Tax Credit, it can’t also be claimed under Home Accessibility Tax Credit.

Registered plans and investments (RRSP/RRIF/TFSA/RESP/RDSP/FHSA/DPSP)

Qualified investments reforms (simplification)

Small business investments

  • Keeps and expands the “first set” of small business rules and extends them to RDSPs.
  • Repeals the “second set” (eligible corporations, small business investment LPs and trusts).
  • Effective Jan 1, 2027 (grandfathering for some pre-2027 LP/trust interests).

Registered investment regime replaced

  • Replaces CRA “registered investment” concept with two new trust categories tied to Canadian securities regulation/registered fund managers.
  • Registered investment regime repealed Jan 1, 2027; new trust categories apply as of Budget Day.

Other technical cleanup

  • Consolidates qualified investment rules for most plans into a single definition (except DPSPs).
  • Reorganizes prescribed lists by asset class.

Worker compliance and enforcement

Worker misclassification (CRA ↔ ESDC information sharing)

  • Allows CRA to share necessary taxpayer/confidential info with ESDC to enforce worker classification under the Canada Labour Code.
  • In force on Royal Assent.

Photo by Markus Winkler from Pexels.