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How to lower your income tax in Canada in 2026

Last updated: Limits from CRA

Short answer

The most effective ways to lower your 2026 income tax are to contribute to an RRSP (up to $33,810) or an FHSA (up to $8,000), both of which are deducted from your income, and to claim every credit you qualify for. A TFSA does not cut this year's tax but shelters future growth from tax.

How do I lower my income tax in 2026?

  1. 1

    Contribute to an RRSP

    RRSP contributions are deducted from your income. For 2026 you can contribute 18% of 2025 earned income, up to $33,810, plus unused room.

  2. 2

    Open a First Home Savings Account if you are buying

    First-time buyers can deduct up to $8,000 a year ($40,000 lifetime), and withdrawals for a first home are tax-free.

  3. 3

    Use your TFSA for investment growth

    TFSA contributions are not deductible, but growth and withdrawals are tax-free. The 2026 limit is $7,000.

  4. 4

    Claim every credit you qualify for

    Medical expenses, charitable donations, the disability tax credit and moving expenses all reduce tax. Keep receipts for each.

  5. 5

    Ask your employer to reduce tax at source

    If you make regular RRSP contributions, file form T1213 so less tax comes off each paycheque instead of waiting for a refund.

How much tax does a $5,000 RRSP contribution save?

On a $90,000 salary in British Columbia, contributing $5,000 to an RRSP cuts 2026 income tax by about $1,410. That is close to the combined 28.2% marginal rate at that income.

You can check your own numbers in the take-home pay calculator, which has an RRSP field.

What are the 2026 RRSP, TFSA and FHSA limits?

  • RRSP: 18% of 2025 earned income, up to $33,810, due by March 1, 2027.
  • TFSA: $7,000 for 2026.
  • FHSA: $8,000 a year, $40,000 lifetime.

Frequently asked questions

What is the TFSA limit for 2026?

The TFSA limit for 2026 is $7,000. Someone eligible since 2009 who has never contributed has $109,000 of total room.

Is an FHSA better than an RRSP for a first home?

Often, yes. FHSA contributions are deductible like an RRSP, and qualifying withdrawals for a first home are tax-free and never have to be repaid, unlike the RRSP Home Buyers' Plan.

Sources

This guide is general information, not tax advice. Your own limits are on your CRA Notice of Assessment.