Personal Support Workers Tax Credit – What You Need to Know from Budget 2025 

Budget 2025 introduces a significant new tax measure aimed at supporting personal support workers (PSWs) across Canada. The proposed Personal Support Workers Tax Credit is a temporary, refundable tax credit designed to recognize the essential role PSWs play in our health care system and to provide direct financial support to those who qualify. Here’s what you and your clients need to know. 

What Is the Personal Support Workers Tax Credit? 

The Personal Support Workers Tax Credit is a refundable tax credit equal to 5% of eligible earnings, up to a maximum of $1,100 per year. This means that eligible PSWs can receive a direct payment from the government, even if they do not owe any income tax for the year. The credit is available for the 2026 to 2030 taxation years. 

Who Qualifies as an Eligible Personal Support Worker? 

To be considered an eligible personal support worker for the purposes of this credit, several conditions must be met: 

• Employment Role: The individual must perform duties as a personal support worker for an eligible health care establishment during the taxation year. 
• Nature of Work: The PSW must ordinarily provide one-on-one care and essential support to optimize and maintain another individual’s health, well-being, safety, autonomy, and comfort. This care must be consistent with the individual’s health care needs as directed by a regulated health care professional or a provincial/community health organization. 
• Main Duties: The main employment duties must include assisting individuals with activities of daily living and mobilization. 

What Is an Eligible Health Care Establishment? 

Eligible health care establishments include: 

• Hospitals
• Nursing care facilities
• Residential care facilities
• Community care facilities for the Older people
• Home health care establishments
• Other similar regulated health care establishments

The establishment must be regulated and provide health care services as described above . 

What Counts as Eligible Earnings? 

Eligible earnings for the credit include: 

• All taxable employment income (wages, salaries, and employment benefits) 
• Similar tax-exempt income and benefits earned on a reserve 

These earnings must be for employment as a PSW at an eligible health care establishment. Importantly, amounts earned in British Columbia, Newfoundland and Labrador, and the Northwest Territories are not eligible. These provinces and territory have separate agreements with the federal government to increase PSW wages through direct funding, so the tax credit does not apply there . 

Employers are required to certify employees’ eligible earnings in the prescribed form and manner for the credit to be claimed. 

Additionally, Self-employed personal support workers, including those providing in-home support or similar services, do not qualify for the Personal Support Workers Tax Credit as proposed in Budget 2025. Eligibility is limited to individuals who are employees of eligible health care establishments, as defined in the legislation. And whose eligible remuneration is certified by their employer. 

Additional Key Details 

• Tax Return Requirement: Individuals must file a tax return to claim the credit. If an eligible individual dies during the year, a return filed by their legal representative is deemed to be filed by the individual. 
• Bankruptcy: If an eligible individual becomes bankrupt during the year, both pre- and post-bankruptcy eligible earnings are included in the calculation for the credit.
• Employer Certification: Employers must certify the eligible earnings for each employee in the prescribed form and manner. 

When Does the Credit Apply? 

The Personal Support Workers Tax Credit applies to the 2026 through 2030 taxation years. This means the first claims can be made when filing 2026 tax returns in 2027. 

Why Is This Important? 

This credit is a direct recognition of the vital work performed by PSWs, especially in the wake of the COVID-19 pandemic and ongoing demographic changes. It provides meaningful financial support and may help with recruitment and retention in this essential sector. 

What Should PSWs and Employers Do Now? 

• PSWs: Keep records of your employment and ensure your employer is aware of the need to certify your eligible earnings. 
• Employers: Prepare to implement processes for certifying eligible earnings in the prescribed form and manner for your PSW employees. 

Example: How the Personal Support Workers Tax Credit Works 

Maria is a personal support worker employed full-time at a residential care facility in Ontario. In 2026, she earns $40,000 in wages and receives $2,000 in employment benefits, for total eligible earnings of $42,000. 

• The tax credit is 5% of eligible earnings: 5% x $42,000 = $2,100. 
• However, the maximum credit is capped at $1,100. 
• Maria’s employer certifies her eligible earnings on the required form. 
• When Maria files her 2026 tax return, she claims the credit and receives $1,100 as a refundable tax credit, even if she owes no tax. 

Therefore, If Maria worked in British Columbia, her earnings would not be eligible for this credit due to the province’s separate funding agreement. 

Conclusion 

Finally, The Personal Support Workers Tax Credit is a welcome measure for many in the health care sector. If you or your clients are PSWs, or employ PSWs, it’s important to understand the eligibility criteria and ensure all necessary documentation is in place to benefit from this new refundable tax credit when it comes into effect for the 2026 tax year. 

However, If you have questions about how this credit may apply to your situation, please contact us.