2026 Update: 5 Ways to Reduce Taxes in Ontario, Canada
In 2026, many Ontarians are discovering they're paying more taxes than necessary. The good news? You have legitimate options to reduce your tax burden that are legal, effective, and won’t trigger a CRA audit.
At Grand River Financial Solutions, we help Ontario families create personalized tax reduction strategies as part of our comprehensive financial planning approach. These five proven methods require some planning upfront, but they deliver real results that can save you thousands of dollars annually.
Key Takeaways
Tax-advantaged accounts like TFSAs and RRSPs can save thousands in taxes each year
Many Ontarians miss valuable tax credits worth hundreds or thousands of dollars
Professional tax planning typically pays for itself through savings over time and avoided tax mistakes
Simple record-keeping throughout the year maximizes your eligible deductions
Strategic charitable giving reduces taxes while supporting causes you care about
Frequently Asked Questions
FAQ: What is the difference between a refundable and non-refundable tax credit?
A non-refundable tax credit can reduce your tax to $0 but won’t give you money back
A refundable tax credit can reduce your tax below $0, giving you a refund if the credit exceeds your tax owed.
FAQ: Is tax planning only important during tax season?
No, tax planning is always important and for the best results it shouldn't wait until tax season. Regular reviews ensure your strategies align with life changes like career advancement, marriage, children, or business ownership. Proactive planning creates opportunities that reactive filing simply can't match.
FAQ: Is it illegal to contribute to an RRSP to avoid income tax?
No, there are legal ways to reduce your tax burden, and contributing to an RRSP is one of them since contributions are tax-deductible.
1 - Take Advantage of Available Tax Credits
Tax credits directly reduce the amount of tax you owe. Unlike deductions that reduce your taxable income, credits provide dollar-for-dollar tax savings. Despite this, many Canadians fail to take advantage of tax credits they’re eligible for, simply because they aren’t aware of them.
One of the most well-known tax credits available is the Canada Child Benefit (CCB), but that isn’t even scratching the surface.
Here are just a few of Canada’s most used tax credits:
Canada Caregiver Credit (CCC): This non-refundable tax credit supports families caring for relatives with mental or physical disabilities. If you're providing basic necessities like food, shelter, or clothing to a dependent family member who regularly relies on your support, you may qualify for significant tax relief. Many caregivers don't realize they're eligible for this valuable credit.
First-Time Home Buyers' Tax Credit (HBTC): New homeowners can claim up to $750 in non-refundable credits for qualifying purchases. This credit works alongside other home-buying incentives and requires meeting specific first-time buyer criteria. Given Ontario's housing market, every bit of tax relief helps with homeownership costs.
Tuition Tax Credits: Post-secondary education costs qualify for tax credits, including skills development courses at certified institutions for anyone 16 or older. These credits can be carried forward indefinitely or transferred to family members, providing flexibility for families managing education expenses.
Canada Workers Benefit (CWB): This refundable credit helps working individuals and families with lower incomes. It’s designed for people who are actively working but still continue to have a low annual income. The amount varies based on your income and family situation. Since it's refundable, you may receive money back even if you don't owe taxes. Find out if your income amount is eligible for this tax credit here.
You can find more tax credits on the official government website: Tax credits and benefits for individuals
2 - Work with a GRFS Tax Planner
Tax laws change annually, and staying current requires dedicated expertise. What worked last year might not apply in 2026, and there are new tax-saving opportunities popping up every year.
Professional tax planners identify savings strategies most people miss and prevent costly mistakes that could trigger audits or penalties.
At Grand River Financial Solutions, we integrate tax planning strategies into our comprehensive 8-step financial planning process. We don't believe in one-size-fits-all strategies. Every tax plan is customized based on your income sources, family situation, business interests, and long-term financial goals.
Our services include personal tax planning and corporate tax planning combined with smart, year-round investment planning, retirement planning, and complete financial planning.
If you want to learn more about how we can help you save on taxes every year, start by booking a free, no-obligation consultation!
3 - Reduce Income Taxes with RRSP and FHSA Contributions
Making contributions to a registered account like a RRSP or FHSA, is a great way to reduce your overall income tax.
You may be thinking, how does this work? It’s actually quite simple.
An RRSP or FHSA allows you to deduct your contributions from your taxable income, which lowers the amount of income tax you owe for that year. At the same time, your investments grow tax-deferred (RRSP) or tax-free if used for a qualifying home purchase (FHSA).
Registered Retirement Savings Plan (RRSP)
RRSP contributions provide immediate tax deductions, reducing your current year's taxable income. You can contribute up to 18% of your previous year's earned income, subject to annual maximums. The tax-deferred growth continues until retirement when withdrawals are taxed as regular income.
This creates a powerful strategy: contribute when your income is high and withdraw when your retirement income is lower, potentially saving thousands in taxes over your lifetime.
First Home Savings Account (FHSA)
The FHSA combines TFSA and RRSP benefits specifically for first-time home buyers. Contributions are tax-deductible like RRSPs, but withdrawals for qualifying home purchases are tax-free like TFSAs.
4 - Keep Receipts for Tax Deductions
Proper record-keeping throughout the year ensures you don't miss valuable deductions.
Medical Expenses: You may be able to deduct medical expenses exceeding 3% of your net income. Include prescriptions, dental work, medical devices, and eligible treatments.
Education Expenses: Tuition fees for post-secondary education qualify for tax credits. Include textbooks and mandatory fees, and remember these credits can be carried forward indefinitely.
Employment Expenses: Remote workers can deduct home office costs. Professional development fees, required uniforms, safety equipment, and work-related travel expenses (excluding regular commuting) may also be deductible.
Moving Expenses: When moving 40+ kilometres closer to work or school, you can deduct transportation costs, storage fees, and temporary accommodation expenses. These must be claimed in the year of the move and usually requires supporting documentation.
Maintaining organized records throughout the year is important to ensure you don’t miss tax-deductible expenses. Store supporting documentation for major claims and keep all tax records for six years after filing, as required by the Canada Revenue Agency.
5 - Take Advantage of Tax-Smart Donating
Charitable donations generate tax credits that directly reduce your tax bill. The combined federal and provincial credit rates make donations particularly valuable for Ontario residents.
The best way to do this is to:
Donate strategically: Consider combining multiple years of giving into one tax year to maximize the higher credit rates. Time larger donations during high-income years when the tax savings provide the greatest benefit. This is great for those with variable incomes.
Donate Appreciated Securities: Instead of donating cash, consider giving stocks, bonds, or mutual funds that have increased in value. This strategy can allow you to avoid capital gains tax while claiming the full fair market value as a donation credit.
Family Donation Planning: Combine spousal donations on one tax return to maximize the benefit of higher credit rates. Consider having the higher-income spouse claim all family donations for optimal tax savings. Coordinate donation timing with other income events like RRSP withdrawals or business income spikes.
Keep in mind that only donations to registered organizations qualify for tax credits.
Disclaimer: The information provided is based on current laws, regulations, and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.