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Tax deduction or tax credit?

Tax deduction and tax credit

A deduction lowers the income you’re taxed on; a credit lowers the tax you owe directly. For the same amount, they’re not worth the same.

The 2026 numbers

14%
Federal non-refundable credit, per eligible dollar
14%
Provincial credit, Québec
36.1%
Value of a deduction at $60,000

Numbers checked against the official sources on September 28, 2026.

What it’s for

  • Understanding what an contribution (a deduction) is worth next to the basic personal amount (a credit).
  • Not overestimating a credit, or underestimating a deduction when your income is high.

Who it’s for

  • Anyone who files a tax return.

How it works

  1. Deduction: the amount comes off your income. It’s worth your : the higher your income, the more it saves.

  2. Non-refundable credit: the amount is multiplied by a fixed rate, 14% federally and 14% in Québec. It’s worth about the same for everyone, but only if you have tax to pay.

  3. Refundable credit: paid to you even if you owe no tax.

  4. In Québec, the Québec abatement (16.5% of basic federal tax) slightly reduces the value of federal credits.

An example

Two amounts of $1,000, income of $60,000 in Québec

The same amount, as a deduction or as a credit.

Example: Québec
A $1,000 deduction
$356
A federal credit on $1,000
$140
A provincial credit on $1,000
$140

The deduction is calculated with the full 2026 tax rules (a marginal rate of about 36.1%); the credits at each government’s base rate.

Fictional example, round numbers.

Common mistakes

  • Adding up a deduction and a credit as if they were worth the same.
  • Expecting a non-refundable credit to be paid out when you owe no tax.
  • Claiming a deduction in a low-income year when it could wait (you can with the RRSP and the ).

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General information to help you understand, not personalized advice. Rules change: every number links to its official source.