Personal support workers in most provinces and territories will be eligible for a refundable tax credit equal to five per cent of eligible earnings, providing support of up to $1,100 per year from 2026 to 2030.
Budget 2025 introduces the temporary Personal Support Workers Tax Credit to support front-line health care workers. The measure is estimated to cost $1.48 billion over six years starting in 2025-26.
Of this amount, $1.17 billion will be sourced from funding previously committed but unutilized to support wage increases for personal support workers. The credit puts more money back in the pockets of workers who care for Canadians.
Bilateral agreements
The government previously announced $1.7 billion over five years as part of the February 2023 Working Together to Improve Health Care for Canadians plan to increase wages for personal support workers.
Bilateral agreements were signed with British Columbia providing $232 million, Newfoundland and Labrador providing $25 million, and the Northwest Territories providing $5.3 million.
The tax credit applies to personal support workers employed in the remaining provinces and territories that have not signed bilateral wage increase agreements.
Worker demographics
Personal support workers are disproportionately women, Black or racialised, newcomers, working-age and have low to modest incomes, according to 2021 Census data.
Around 86 per cent of personal support workers were women. Black or racialised people were overrepresented at around 39 per cent of all personal support workers, compared to 24 per cent of the Canadian population aged 15 and older.
The average employment income of personal support workers was around $34,000 in 2020, compared to $50,000 for all those aged 15 years and over with employment income.
Role in pandemic
Personal support workers supported Canadians in living and aging with dignity and helped the country through the COVID-19 pandemic, the budget states.
The credit recognizes the critical role these workers play in the health care system by providing direct support to patients and residents in homes, hospitals and long-term care facilities.
Eligibility and implementation
Eligible personal support workers can claim the refundable tax credit when filing their income taxes for the 2026 through 2030 taxation years.
The credit applies to earnings from personal support work, which includes providing direct care to patients or residents who require assistance with daily living activities.
Details on specific eligibility criteria, income thresholds and application processes will be released by the Canada Revenue Agency ahead of the 2026 tax year.
Healthcare workforce support
The tax credit forms part of broader efforts to support healthcare workers and address labour shortages in the sector.
Budget 2025 also provides $97 million over five years starting in 2026-27 to establish the Foreign Credential Recognition Action Fund, which will focus on health and construction sectors. The fund will work with provinces and territories to improve credential recognition processes.
Many newcomers to Canada already have extensive training as doctors, nurses and other healthcare professionals but face challenges getting their training and experience recognized. Over half of immigrants with a bachelor’s degree or higher are overqualified for their jobs, costing Canada’s economy billions of dollars annually.
The budget states improvements to foreign credential recognition are essential to ensure immigration can effectively help address labour shortages in sectors including healthcare.
