Canada’s federal government has announced plans to introduce substantial financial recognition for personal support workers through a new refundable tax credit worth up to $1,100 annually. This proposed Personal Support Workers Tax Credit, unveiled in Budget 2025, represents one of the most significant federal initiatives to support frontline care workers in Canadian history.
If approved by the House of Commons, the credit would provide meaningful financial relief to thousands of PSWs working in hospitals, long-term care facilities, nursing homes, and home-care settings across most of Canada from 2026 through 2030.
This comprehensive guide explains everything personal support workers need to know about this proposed benefit, including detailed eligibility requirements, income thresholds, provincial exclusions, employer certification processes, filing procedures, and the expected impact on Canada’s healthcare workforce.
Understanding the Proposed Tax Credit: Key Features
The Personal Support Workers Tax Credit is structured as a refundable federal tax credit—a crucial distinction that makes it accessible to workers across all income levels, including those who owe no income tax.
Credit Amount and Calculation
The proposed credit equals 5% of eligible earnings, up to a maximum of $1,100 per year. This means PSWs earning $22,000 or more annually in qualifying income would receive the full $1,100 credit each year the program operates.
Income-to-Benefit Examples:
- $10,000 in eligible earnings → $500 credit
- $15,000 in eligible earnings → $750 credit
- $20,000 in eligible earnings → $1,000 credit
- $22,000+ in eligible earnings → $1,100 maximum credit
Since most full-time PSWs earn well above the $22,000 threshold, the majority of full-time workers would qualify for the maximum annual benefit. Part-time workers, students, and casual home-care providers would receive proportional amounts based on their actual eligible income.
Refundable Status: What It Means for Workers
The refundable nature of this credit is critically important. Unlike non-refundable credits that only reduce taxes owing, refundable credits provide actual money back to taxpayers—even those with zero tax liability.
This design ensures the credit reaches its intended recipients: frontline care workers who often earn modest incomes despite performing essential, physically demanding work. Workers who owe no income tax would still receive the full credit amount as a direct payment from the Canada Revenue Agency.
Program Duration: 2026-2030
The proposed credit is time-limited, applying only to five taxation years:
- 2026
- 2027
- 2028
- 2029
- 2030
Workers would claim the credit when filing their annual tax returns each spring. The first credit would be claimed when filing 2026 taxes in spring 2027. Earnings from 2025 and earlier years do not qualify under this proposal.
The five-year timeframe suggests this is a targeted incentive program rather than permanent policy, though future budgets could potentially extend it based on program outcomes and workforce needs.
Budget Approval Required
It’s crucial to understand that this remains a proposed measure. The credit will only become law if Budget 2025 passes through the House of Commons with this provision intact. Until parliamentary approval occurs, the credit remains a budget proposal rather than confirmed policy.
Who Qualifies as an Eligible Personal Support Worker?
The proposed eligibility criteria are detailed and specific, designed to ensure the credit reaches genuine frontline caregivers while excluding workers in non-care roles.
Core Definition of Eligible PSW
An eligible personal support worker must provide direct, one-on-one care and essential support focused on optimizing or maintaining an individual’s health, safety, well-being, autonomy, or comfort.
These services must be delivered according to care needs determined or directed by:
- A regulated healthcare professional (such as a nurse, physician, or occupational therapist)
- A provincially authorized community health organization
The emphasis is on hands-on care rather than administrative, clerical, hospitality, housekeeping, or cleaning-only services. While PSWs may perform some support tasks beyond direct care, their primary employment duties must center on essential personal care activities.
Required Primary Duties
To qualify, a worker’s main employment responsibilities must include assisting clients or patients with activities of daily living (ADLs), such as:
Personal Hygiene and Grooming:
- Bathing and showering assistance
- Hair care and oral hygiene
- Grooming and appearance maintenance
Dressing and Clothing:
- Helping clients put on and remove clothing
- Selecting appropriate attire
- Managing adaptive clothing and devices
Feeding and Nutrition:
- Meal preparation and serving
- Feeding assistance for those unable to self-feed
- Monitoring food intake and hydration
Toileting and Continence:
- Assistance with toilet use
- Continence care and management
- Personal hygiene following toileting
Mobility and Transfers:
- Helping clients move between bed, chair, and wheelchair
- Walking assistance and fall prevention
- Safe transfer techniques using appropriate equipment
Repositioning and Comfort:
- Regular repositioning to prevent pressure injuries
- Ensuring client comfort and safety
- Monitoring for changes in condition
Social and Emotional Support:
- Providing companionship and emotional comfort
- Facilitating social engagement
- Supporting cognitive stimulation activities
If these activities represent a worker’s core duties performed under appropriate professional direction, they will likely meet the proposed definition of an eligible PSW.
Eligible Health Care Establishments: Where You Must Work
The proposed credit applies exclusively to workers employed by eligible health care establishments—a term specifically defined in Budget 2025 to include:
- Hospitals (public and private)
- Nursing care facilities
- Long-term care homes
- Residential care facilities
- Community care facilities for seniors
- Regulated home-health-care establishments
- Similar provincially regulated health facilities
Critical Requirement: The establishment must be formally regulated under provincial or territorial law. This ensures appropriate oversight, professional standards, and worker protections.
What Doesn’t Qualify
The following arrangements would likely not qualify under the proposed credit:
- Informal private employment arranged directly between families and individual care workers
- Unregulated private care arrangements without proper licensing
- Self-employment providing care services outside regulated establishments
- Care work performed in non-health settings (such as general housekeeping or companionship services without essential care components)
PSWs working through licensed home-care agencies or provincially approved organizations would generally qualify, as these entities typically meet regulatory requirements.
Defining Eligible Earnings: What Income Counts
Eligible earnings include all taxable employment income earned by an eligible PSW while performing qualifying duties for an eligible health care establishment.
Income That Qualifies
- Regular wages and salaries
- Hourly employment income
- Overtime pay
- Shift premiums and differentials
- Taxable employment benefits related to PSW work
- Tax-exempt income earned on a reserve (for Indigenous workers)
Income That Does NOT Qualify
- Employment income from non-PSW jobs or positions
- Income earned working at unregulated facilities
- Private cash-based care arrangements lacking proper employment structure
- Self-employment income unrelated to regulated PSW duties
- Contract income from independent consulting or training
Multiple Employers
PSWs working for multiple eligible employers can combine income from all qualifying positions when calculating their credit. However, each employer must separately certify the eligible earnings they paid to the worker during the taxation year.
This certification requirement ensures accurate income reporting and prevents fraudulent claims.
Provincial and Territorial Exclusions: Where the Credit Doesn’t Apply
The proposed Personal Support Workers Tax Credit would not apply to workers in three jurisdictions:
- British Columbia
- Newfoundland and Labrador
- Northwest Territories
Why These Exclusions?
These regions have separate bilateral agreements with the federal government through the Personal Support Workers and Related Professions Addendum to their Aging with Dignity agreements.
Under these agreements, PSWs in excluded jurisdictions receive dedicated wage-increase funding directly rather than through the tax system. The exclusion prevents duplication of federal benefits—workers in these regions still receive compensation support, just through a different mechanism.
PSWs in these provinces and territories should contact their provincial health ministries or employers for information about their specific wage enhancement programs.
Employer Certification: A Critical Requirement
To prevent incorrect or fraudulent claims, the proposed credit includes a mandatory employer certification requirement.
What Employers Must Certify
Employers of eligible PSWs must confirm:
- The worker was employed as a personal support worker during the taxation year
- The duties performed meet the eligibility criteria defined in legislation
- The establishment qualifies as an eligible health care establishment
- The total eligible earnings paid to the worker are accurate
Certification Process
Once Budget 2025 passes (if approved), the Canada Revenue Agency will publish:
- A prescribed certification form
- Official guidelines for employers
- Filing instructions and deadlines
Important: PSWs with multiple employers must obtain separate certifications from each employer to ensure all qualifying income is counted toward their credit calculation.
Without proper employer certification, the CRA cannot verify eligibility, and claims may be delayed or denied.
How to Claim: Filing Your Tax Return
Because this is a refundable tax credit administered through the tax system, PSWs must file an annual tax return to receive the benefit—even if they have no taxes owing.
Filing Process
- Obtain employer certification of your eligible PSW earnings for the tax year
- File your annual tax return by the standard deadline (typically April 30)
- Complete the prescribed form for the PSW tax credit (specific form to be announced)
- Include employer certification with your return or as requested by CRA
- CRA calculates and issues your credit amount
Workers who do not file tax returns will not receive the credit, regardless of their eligibility. This makes tax filing absolutely essential for accessing the benefit.
Free Tax Filing Assistance
PSWs uncertain about tax filing can access free support through:
- Community Volunteer Income Tax Program (CVITP): Free tax preparation for modest-income individuals
- CRA’s Auto-fill My Return: Automated filing service for simple returns
- NETFILE-certified software: Many offer free versions for lower-income filers
Special Provisions: Death and Bankruptcy
Budget 2025 includes compassionate provisions ensuring eligible workers aren’t unfairly excluded due to major life events.
If a Worker Dies During the Year
When an eligible PSW dies during a taxation year, the tax return filed by the worker’s legal representative or estate executor is treated as having been filed by the worker themselves. This ensures the credit is still calculated and issued for that year, providing financial support to the worker’s estate or surviving family members.
If a Worker Becomes Bankrupt
Eligible earnings from both before and after a bankruptcy event during the taxation year count toward calculating the credit. This provision ensures that personal financial difficulties don’t disqualify workers from receiving support they earned through their PSW employment.
Strategic Rationale: Why This Credit Matters
Canada faces a severe and growing shortage of personal support workers across all care settings. Vacancy rates remain persistently high as the population ages rapidly and demand for care services accelerates.
Multiple Policy Goals
The proposed PSW tax credit aims to address workforce challenges by:
Improving Retention: Financial incentives help keep experienced workers in demanding roles with high turnover rates.
Attracting New Workers: Additional compensation makes PSW careers more financially viable, particularly for individuals considering career transitions.
Supporting Low-Income Workers: Many PSWs earn modest wages despite essential contributions; the credit provides meaningful income supplementation.
Recognizing Essential Work: The credit acknowledges the physically demanding and emotionally intense nature of PSW work.
Stabilizing Health Systems: Improved PSW staffing reduces pressure on nurses and other licensed professionals, decreases hospital discharge delays, and improves care continuity.
Avoiding Employer Cost Increases: Unlike mandated wage increases, this tax-based approach provides worker benefits without increasing employer payroll expenses or healthcare operating costs.
Expected Workforce Impact
Improved PSW retention and recruitment would benefit Canada’s healthcare system through:
- More consistent staffing in long-term care facilities
- Reduced waitlists for home-care services
- Decreased hospital discharge delays due to care placement availability
- Lower burnout rates among existing PSWs
- Improved continuity of patient care relationships
- Reduced training costs associated with high turnover
Multi-year financial incentives can help stabilize a workforce experiencing chronic shortages that undermine care quality and system sustainability.
Timeline: When Benefits Would Begin
If Budget 2025 passes with this provision intact:
- 2026 Tax Year: First year of eligibility; credit claimed when filing taxes in spring 2027
- 2027-2029 Tax Years: Continuing annual credits
- 2030 Tax Year: Final year of the five-year program; claimed in spring 2031
Earnings from 2025 and all previous years do not qualify under this proposal. Workers should begin organizing employment documentation now to ensure smooth claiming when the program launches.
Conclusion: Significant Support If Approved
The proposed $1,100 Personal Support Workers Tax Credit represents substantial federal recognition of the essential work performed by frontline care workers across Canada. Worth up to $5,500 over five years for full-time workers, this benefit could provide meaningful financial stability and career incentive for a workforce that forms the backbone of elder care, disability support, and long-term care systems.
However, this remains a budget proposal requiring parliamentary approval. PSWs should monitor Budget 2025’s progress through the House of Commons and watch for CRA guidance if the measure passes.
For eligible workers in provinces and territories where the credit would apply, this proposed benefit acknowledges the demanding nature of PSW work and reinforces the critical importance of strong, stable frontline care for Canada’s most vulnerable populations.
Frequently Asked Questions
Who exactly qualifies for the $1,100 PSW tax credit?
Workers who provide direct essential personal care—such as bathing, dressing, feeding, mobility assistance, and personal hygiene support—at regulated healthcare establishments like hospitals, long-term care facilities, or licensed home-care agencies. Primary duties must involve activities of daily living, and employers must certify earnings.
How much money will I receive from this credit?
Up to $1,100 per year from 2026-2030. The credit equals 5% of eligible PSW earnings, so you’ll receive the full amount if you earn $22,000+ annually in qualifying income. Lower earners receive proportional amounts (for example, $15,000 in earnings = $750 credit).
Which provinces are excluded from the PSW credit?
British Columbia, Newfoundland and Labrador, and Northwest Territories. These regions have separate federal wage-enhancement agreements for PSWs, so the tax credit doesn’t apply to prevent duplication of benefits.
Is this credit automatic or do I need to apply?
Not automatic. You must obtain employer certification of eligible earnings and file an annual tax return to claim the credit. The Canada Revenue Agency will then calculate and issue the refundable amount.
When will I start receiving this benefit?
If Budget 2025 passes, the first credit applies to 2026 earnings, which you’d claim when filing your 2026 tax return in spring 2027. The program continues through 2030 (claimed in 2031).
