New: Personal Support Workers Tax Credit Coming Soon

Evelyn Jacks

Personal support workers will receive billions in increased wages from federal/provincial governments in B.C., Newfoundland and Labrador and the Northwest Territories.  Those workers in other provinces will now get a raise too, but they will have to wait until filing their 2026 returns in the spring of 2027 to cash in, according to an October 27 pre-budget announcement.  Here are the details:

The Backdrop. Bilateral agreements signed in February 2023 provided for nearly $2 billion over five years to increase wages for Personal Support Workers (PSWs). These workers play a vital role in helping seniors remain in their homes longer. Their work often involves travelling from client to client, putting in long hours, and working with multiple agencies to support their families.

While a refundable tax credit may seem appealing, it may not offer meaningful financial relief—especially if the income threshold for eligibility is set too low.

To date, only three agreements have been signed:

• British Columbia – $232 million
• Newfoundland and Labrador – $25 million
• Northwest Territories – $5.3 million

More broadly, funding from the bilateral agreements is intended to distribute:

• $25 billion over 10 years to support shared health priorities
• $4.8 billion over 4 years to enhance home and community care, and mental health and addictions services
• $3 billion over 5 years to improve safety in long-term care
• $1.7 billion over 5 years to support wage increases for PSWs and related professions

The new Personal Support Workers Tax Credit will apply for the 2026 to 2030 taxation years, available to eligible workers employed in provinces and territories not covered by bilateral agreements. This includes the following jurisdictions, all of which have signed agreements in principle:

• Yukon, Nunavut, Alberta, Saskatchewan, Manitoba
• Ontario, Quebec, Nova Scotia, New Brunswick, Prince Edward Island

The Details of the Credit.  The refundable tax credit would provide support of up to $1,100 per year, available after the once a T1 return is filed and assessed.  

What we know so far is that this refundable credit would be calculated at five per cent of eligible earnings, as yet undefined.  We will look to the November 4, 2025 Federal Budget details to tell us more.   

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The Numbers Tell the Story.  What difference will this make to the personal support workers?  First, given this will be a refundable tax credit,  there will be no actual relief until a tax return is filed and assessed in the spring of  2027.   In other words, the potential $1100 credit won’t affect take home pay every two weeks.  

We look to the numbers to tell the real story. It would appear that the maximum earnings level to earn the full refundable credit would be $22,000 or $11.28 per hour.

Looking to the real world, however, the average wage for a Personal Support Worker (PSW) in Manitoba is around $19-$20 per hour, though this can vary based on specific job titles, experience, and location. Some sources report the median wage for a home support worker as $16.00 per hour, while others indicate higher averages for support workers in general.  Here’s a breakdown:

• Median hourly wage for Home Support Worker: $16.00
• Average hourly wage for Support Worker: $19.40
• Average hourly wage for Health Care Aide: $14.42 (in Winnipeg)

Hourly wages for specific roles:

• Mental Health Support Worker: $21.67 per hour (in Winnipeg)
• Housing Support Worker: $19–$22 per hour
• Housekeeping Unit Support Worker: $17.58 per hour 

Let’s assume an hourly wage of $20, which is equivalent to an annual salary of $41,600. This is calculated by multiplying the hourly rate by 40 hours per week and then by 52 weeks per year ($20 x 40 x 52 = $41,600). At 5%, the number works out to be $2080. But this is more than the maximum credit allowable, so $1100 would be claimed.  This is equivalent to a 2.6% wage hike on the $41,600 earned. . .but as mentioned, workers will have to wait for it. 

In a second example, an hourly wage of $16 is assumed.  That’s equivalent to an annual salary of approximately $33,280, assuming a standard 40-hour work week and 52 weeks a year.  Again, the refundable personal support workers credit would be capped. 5% of eligible earnings is $1664, but the maximum credit is $1100.  This would amount to a 3% wage hike, via the tax system.  Note, however, that if the tax filer otherwise has a balance due, the credit will reduce that number.  Again, not really like a raise.

What would these workers pay in taxes?  As minimum wages are rising, lower earners are being bumped into higher tax brackets and this is having an affect on their take home pay. 

For example, in our first example above, where the taxpayer is earning $20 an hour and working full time, assuming normal deductions with EI and CPP source remittances required to be withheld for 2025, federal taxes of $3052 and in Manitoba provincial taxes of $2470 would be paid for a total of $5,522. The $1100 credit would reduce this downward to $4422.  This amounts to a 20% reduction in tax. Take home pay would be $37,178 or $3098 per month.

In the second example, with a $16 hourly wage, working full time, the federal taxes are $1937, and the Manitoba taxes are $1639 for a total of $3576.  The $1100 credit would reduce taxes owing to $2476. This amounts to a 31% reduction in tax. Take home pay would be $30,804 or $2567 per month.

Note that these calculations use a Basic Personal Amount in 2025 of $15,705.  It is estimated to rise to $16,452 in 2026. 

What’s the Real Tax News?  Life in the real world can look quite different, however.  A recent chat with a Canadian tax preparer revealed that of the half dozen clients who are Personal Support Workers:

1. All are newcomers to Canada

2. All are working for multiple (2 or 3) PSW agencies concurrently

3. They are working a lot more than 40 hours per week

4. All are making at least $100,000 gross

5. All are able to write off motor vehicle expenses above their allowance

6. All are exhausted!

The Bottom Line:  Fairness, equity, simplicity and efficiency are all hallmarks of an ideal tax system.  This new refundable tax credit is certainly good news for Personal Care Workers.  However, is this really an improvement in our tax system?  Holistically, why not extend the value of a refundable tax credit to all low income earners? 

Would it not be fairer, simpler and more efficient to raise the Basic Personal Amount for all lower income earners to take them off the tax roles completely?  This would be a more efficient way to put money in pockets with every paycheque, rather than requiring the filing of a complex tax return, in a complex digital environment, only to wait for the money to come in tax filing season 2027?

Most important, if the reality is that these workers are earning six figures, they need tax and financial planning advice to maximize their take home pay and capital accumulation possibilities.  Providing a tax deduction for costs in engaging professional help to take advantage of all their tax assisted opportunities could go a long way in the fight against inflation and uncertainty in today’s economy.

[1] Working Together to Improve Health Care for Canadians plan