New Canada Caregiver Credit: Budget 2026 Proposes Refundable Payments Worth Up to $1,260

Canada is proposing a major change to the Canada Caregiver Credit that could put more money into the hands of people looking after family members with disabilities or long-term medical conditions. Under the federal government’s Budget 2026 proposal, eligible caregivers could receive up to $1,260 annually, even if they have little or no federal income tax to pay.

The proposed reform addresses a major limitation of the existing tax credit: because it is non-refundable, people who owe little or no income tax may not receive its full financial benefit. The government wants to change that from the 2027 tax year, potentially extending support to hundreds of thousands of additional caregivers.

However, the measure is still a budget proposal, not a new payment that Canadians can automatically claim today.

What Is Changing With the Canada Caregiver Credit?

The Canada Caregiver Credit (CCC) is a federal tax credit designed to provide financial relief to people who support relatives with a mental or physical impairment.

Under the current system, the credit is non-refundable. This means it reduces the federal income tax a person owes, but it does not generally generate a payment beyond their tax liability.

Budget 2026 proposes making the credit fully refundable.

If implemented, this would allow eligible caregivers to receive the benefit even when their federal income tax payable is too low to use the full credit.

The federal government estimates that the reform would:

• Provide additional support to approximately 585,000 caregivers.

• Extend benefits to around 180,000 people who currently receive no benefit from the credit.

• Deliver up to $1,260 annually to eligible caregivers in 2027.

• Provide $845 million in additional support over four years, beginning in 2027–28.

• Cost approximately $245 million annually on an ongoing basis.

The government also estimates that the change could help lift approximately 15,000 additional people out of poverty.

These figures are federal government projections, rather than guaranteed payments to individual applicants.

How Much Could Canadians Receive?

The amount depends on the relationship between the caregiver and the person receiving support. The government has published the following maximum amounts for the 2027 tax year:

Figures are the proposed 2027 amounts published in Budget 2026. The maximum tax relief is calculated using the lowest federal personal income tax rate.

There is an important distinction between the credit amount and the money a caregiver may receive. For example, a $9,001 credit does not mean the caregiver receives $9,001 in cash. The maximum estimated financial benefit is $1,260.

The government also proposes to retain the existing income-based reduction. For 2027, the credit would be reduced dollar for dollar by the dependant’s net income above $21,136.

No dependant-income test would apply to an infirm child under 18.

These amounts are subject to annual indexation, meaning they may increase in subsequent years.

Who Qualifies for the Canada Caregiver Credit?

The existing Canada Caregiver Credit is intended for people who provide financial support to relatives with a mental or physical impairment.

Eligible relationships can include:

• A spouse or common-law partner.

• A child or grandchild.

• A parent or grandparent.

• A brother or sister.

• An aunt or uncle.

• A niece or nephew.

The dependant may be related to the caregiver or to their spouse or common-law partner.

For certain adult dependants, the person must have lived in Canada at some point during the tax year. There are specific exceptions for children and grandchildren.

What Does the CRA Consider Financial Support?

The Canada Revenue Agency (CRA) considers someone dependent on a caregiver when they regularly and consistently rely on that person for basic necessities, including:

• Food.

• Housing and accommodation.

• Clothing.

• Transportation.

• Other essential living expenses.

A temporary illness or short-term injury generally does not qualify as an infirmity for this credit. The condition must result in a sufficiently significant and ongoing dependency.

Eligibility also depends on the relationship between the caregiver and the dependant, the dependant’s income and whether other tax credits are being claimed for that person.

The rules differ depending on whether the dependant is a spouse, an eligible dependant or another family member.

Why Is the Government Making the Credit Refundable?

The main reason for the proposed reform is a gap in the current tax system.

A non-refundable tax credit reduces the amount of income tax payable. However, someone with a very low income may have little federal tax to pay and therefore cannot benefit from the entire credit.

This creates a particular problem for low-income caregivers, including people who have reduced their working hours or left employment to look after a family member.

Making the Canada Caregiver Credit refundable would change how the financial support is delivered.

Under the proposed system:

• Caregivers with sufficient federal tax payable could continue benefiting through tax relief.

• Caregivers with little tax payable could receive the remaining eligible benefit.

• Eligible caregivers with no federal income tax payable could still receive the refundable amount.

This is why the reform could be particularly significant for households that provide substantial unpaid care but have limited earnings.

According to the federal government’s impact assessment, approximately 80% of the additional support is expected to go to families with net income below $60,000 in 2027.

When Will the New Canada Caregiver Credit Start?

The federal government proposes that the refundable Canada Caregiver Credit apply to the 2027 and subsequent taxation years.

The distinction between the proposal and the current rules is important:

The reform is therefore not an immediate additional payment for people filing their existing tax returns.

Caregivers should not assume that the new $1,260 maximum is already available for the 2025 or 2026 taxation years.

The proposal also retains the existing design of the credit, including the maximum amounts, income threshold and reduction mechanism.

How to Claim the Canada Caregiver Credit

Although the refundable reform is not yet an available payment, Canadians can already claim the existing non-refundable credit if they meet the eligibility requirements.

The CRA administers the credit through the federal income tax return.

1. Identify the eligible dependant

Check whether the person receiving support meets the CRA’s relationship, residency, income and impairment requirements.

2. Determine the applicable tax credit

The CRA uses different tax-return lines depending on the relationship and age of the dependant.

3. Complete Schedule 5

For the applicable claims, complete Schedule 5, Amounts for Spouse or Common-Law Partner and Dependants, to calculate the amount.

The result is then entered on the appropriate line of the federal income tax return.

4. Keep supporting documents

The CRA does not normally require supporting documents to be submitted with the tax return.

However, taxpayers should retain relevant records in case the agency requests evidence.

This may include a signed statement from a medical practitioner confirming when the impairment began and how long it is expected to last.

An approved Disability Tax Credit Certificate (Form T2201) may remove the need for a separate medical statement for the applicable period.

Official guidance: The CRA’s Canada Caregiver Credit page explains eligibility, calculations and the claiming process.

What the Reform Could Mean for Low-Income Families

The proposed change goes beyond increasing a tax credit. It changes who can actually benefit from it.

Under the current system, two people providing similar levels of care may receive different financial benefits because their taxable income and federal tax liabilities differ.

A caregiver with a relatively high tax bill can use a non-refundable credit more easily than someone whose income is too low to generate sufficient tax payable.

Refundability is designed to reduce this imbalance.

The government estimates that 585,000 caregivers would receive support under the reform, including approximately 180,000 who currently receive no benefit from the credit.

The additional funding is expected to total $845 million over four years, starting in 2027–28.

Nevertheless, the credit should not be confused with a salary, a monthly caregiving allowance or reimbursement for every expense associated with looking after a relative. It remains a tax-based measure with eligibility and income-related conditions.

Frequently Asked Questions

Can I receive the Canada Caregiver Credit if I have no income?

Under the current rules, the credit is non-refundable, so people with little or no federal tax payable may not receive its full value.

If Budget 2026’s proposal is implemented, eligible caregivers could receive the refundable benefit even if they have no federal income tax liability.

Is the new $1,260 caregiver payment available now?

No. The $1,260 figure is the maximum proposed financial benefit for the 2027 taxation year. It is not an immediate payment or an amount that everyone caring for a relative will receive.

Can I claim the credit for my elderly parents?

Yes, potentially. Parents and grandparents are among the eligible family relationships. However, the person must meet the CRA’s requirements concerning impairment, financial dependency, income and other eligibility conditions.

Do I need a Disability Tax Credit Certificate to qualify?

Not necessarily. The CRA may accept a signed statement from a medical practitioner confirming the impairment and its expected duration. If the CRA already has an approved Form T2201 covering the relevant period, a separate statement may not be necessary.

Can two family members claim the credit for the same dependant?

The rules depend on the type of claim. For example, the amount on line 30425 can only be claimed by one person and cannot be divided between family members. Different rules apply to other dependant categories, so families should consult the relevant CRA guidance before filing.

Editorial Assessment: A Welcome Change, but Eligibility Will Matter

Making the Canada Caregiver Credit refundable would address a genuine weakness in the existing system. Financial support for caregivers should not depend entirely on whether they earn enough to owe federal income tax.

The proposed reform could be particularly valuable for people who have reduced their working hours, retired early or left employment to care for a family member.

However, the maximum benefit of $1,260 should be viewed in perspective. Providing unpaid care can involve significant financial costs, lost employment opportunities and long-term pressure on household budgets.

From our perspective, the move towards a refundable credit is a positive development, particularly because it extends potential support to people who have previously been unable to use the full tax benefit.

The next important step is the implementation of the proposal. Until the necessary legislative changes take effect, caregivers should continue following the existing CRA rules rather than assuming the new refundable payment is already available.

Official Sources

1. Canada Revenue Agency — Canada Caregiver Credit
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/canada-caregiver-amount.html

2. Department of Finance Canada — Budget 2026: Tax Measures, Supplementary Information
https://www.budget.canada.ca/2026/report-rapport/tm-mf-en.html

3. Government of Canada — Budget 2026: A More Affordable Life
https://budget.canada.ca/2026/report-rapport/chap3-en.html

4. Canada Revenue Agency — Canada Caregiver Amount for Other Infirm Dependants Age 18 or Older
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-30450-caregiver-infirm-dependant.html