Top 5 Tax Deductions Canadians Miss Every Year

Tax Tips 2025

As an Ontario taxpayer, you could be overlooking deductions and credits that may significantly reduce what you owe—or even boost your refund. Many Canadians miss these opportunities, even on straightforward returns. Here are the top 5 tax deductions and credits often missed, plus key recent updates for this year.

1. Home Office Expenses

Many Ontarians continue working from home and may qualify to deduct eligible home office expenses like utilities, internet, and a portion of rent or property taxes. Even a simplified rate-based method (as supported by CRA) can yield savings—too few claim it despite COVID-era habits lingering.

2. Medical Expense Tax Credit

This non-refundable credit covers a broad range of eligible medical costs—not just prescription drugs:

• Optical care, dental work, travel over 40 km for treatment

• Gluten-free food for celiac condition, therapy and devices

Ontario taxpayers often miss claiming the travel portion, or failing to aggregate family totals to reach the credit threshold. You can still amend returns going back 10 years to claim retroactively.

3. Child Care and Caregiver Credits

Ontario families may be eligible for:

• Child care expense deduction: up to $8,000 per child under 7; $5,000 for age 7–16; and up to $11,000 for disabled children.

• Canada caregiver credit: up to $8,375 for supporting a spouse, partner, or child with disability or medical condition

These figures apply in 2025 and can reduce tax payable significantly.

4. Moving Expenses

If you moved 40 km closer to your workplace or school in 2024 or 2025, you may deduct qualified moving costs—transportation, temporary accommodation, real estate fees. This deduction often slips through the cracks, especially for new employees or students adjusting location.

5. Union and Professional Dues

Many professionals—accountants, teachers, healthcare workers—forget to deduct membership dues to unions or regulatory bodies. Line 21200 (federal) allows deducting annual dues paid to maintain professional status or employment eligibility.

Recent Key Updates for Tax Year 2025

• Middle-Class Federal Tax Cut

Starting July 1, 2025, the lowest federal marginal rate drops from 15% to 14%, which reduces withholding on paycheques and lowers overall tax on the first $57,375 of taxable income. The blended 2025 rate will effectively be 14.5%. While this benefits many, the value of federal non-refundable credits (basic personal amount, caregiver credit, etc.) also drops by 1%, slightly reducing refund value.

• Alternative Minimum Tax (AMT) Changes

AMT rules tightened for 2024 and later years, increasing the exemption threshold and adjusting the calculation of adjusted taxable income. These changes reduce the effectiveness of non-refundable credits in certain situations.

• Short-Term Rental Rule Updates

If you own short-term rental property in Ontario (e.g., Airbnb), non-compliant expenses are no longer deductible as of 2024. This could reduce your ability to claim expenses unless you've complied with local rules.

• Increased Withdrawal Limit for Home Buyers’ Plan (HBP)

Withdraw up to $60,000 from your RRSP under the HBP if used for buying a first home, up from $35,000, if you withdrew after April 16, 2024. Repayment start time may be deferred up to three additional years for eligible participants.

Our firm specializes in tax filings especially for self-employed, contractors, rental hosts, and professionals. We’ll identify all eligible deductions, review recent changes, and help optimize your return.

Not sure what you might be missing? Let’s chat — a quick review could save you money.

Dimpi Verma

July 2025