Tax and Protection
Turning medical expenses into tax savings
By Erica Nielsen, CPA, CA 26 October 2026 7 min read
Navigating out-of-pocket health care costs can be financially overwhelming, but the Canadian tax system offers some relief through the medical expense tax credit (METC). By understanding what qualifies, tracking your receipts, and strategically timing your claims, you may be able to reduce your family's annual tax bill.
The medical expense tax credit (METC)
The METC functions as a non-refundable tax credit1 designed to offset eligible out-of-pocket health care expenses that exceed a minimum threshold. Understanding your minimum threshold can save valuable time as it determines whether gathering minor medical receipts is worth your effort.
How the threshold works
You do not get tax relief on the very first dollar you spend. Instead, the Canada Revenue Agency (CRA) applies a minimum threshold—much like an insurance deductible—before your tax savings kick in.
To create a tax credit, your out-of-pocket eligible medical expenses must exceed the lesser of:
- 3% of your net income (Line 23600 of your tax return).
- The fixed annual threshold ($2,890 for the 2026 tax year, indexed annually)
Once your family's expenses cross that threshold, you receive a 14%2 federal tax credit on the portion above the limit, plus an additional provincial tax credit depending on where you live.
What qualifies as an eligible medical expense?
To be eligible, expenses must be paid out-of-pocket by you or your spouse and not reimbursed by a private health insurance plan, an employer-sponsored health plan, or government program. A broad range of medical expenses can be claimed, including, but not limited to:
- Private health insurance premiums: Premiums you pay for private health, dental, or hospitalization plans (excluding any portion paid by your employer).
- Dental care & orthodontics: Major restorative dental procedures, crowns, dentures, and braces.
- Prescription drugs and medications: Amounts paid for prescription drugs prescribed by a medical practitioner. Note that over-the-counter medications, vitamins, and supplements—even if recommended or prescribed by a doctor—are generally not eligible.
- Vision & hearing: Prescription eyeglasses, contact lenses, laser eye surgery, and hearing aids.
- Licensed health practitioners: Services from authorized medical practitioners (such as chiropractors, acupuncturists and physiotherapists), provided the profession is officially recognized in your province or territory. You can refer to this link to determine whether a specific medical profession is authorized in your location.
- Attendant care and nursing home fees: Full-time nursing home care or wages paid for in-home attendant care can qualify. For retirement homes, only the specific portion attributed to attendant care wages qualifies.
- Note: Claiming these expenses often requires a CRA Form T2201 (disability tax credit (DTC) certificate) or written certification from a medical practitioner. Special rules also apply when combining these claims with the DTC, so consulting your tax advisor is recommended.
- Note: Claiming these expenses often requires a CRA Form T2201 (disability tax credit (DTC) certificate) or written certification from a medical practitioner. Special rules also apply when combining these claims with the DTC, so consulting your tax advisor is recommended.
- Medical services outside of Canada: Amounts paid for medical services obtained by medical practitioners outside of Canada are also eligible.
- Medical travel expenses: If you must travel at least 40 km one-way for medical care not available locally, you can claim public transport or vehicle expenses. If you must travel at least 80 km one-way for medical care not available locally, you can also claim accommodation, meals and parking. If a doctor certifies that you cannot travel alone, an attendant’s travel costs qualify as well.
- When claiming vehicle or meal costs, individuals can select either the detailed or simplified calculation method. Opting for the detailed approach requires maintaining complete records and receipts throughout your chosen 12-month period. For details on the flat rates for meal and vehicle expenses, refer to the CRA's resource here.
For a more extensive list of common medical expenses, you can check the CRA's list here to determine eligibility and confirm whether a prescription or certification is also needed to claim the expense.
Who can you claim expenses for?
You can pool eligible medical expenses into one tax return for:
- Yourself
- Your spouse or common-law partner
- Your children under age 18
You can also claim expenses for adult dependants (such as aging parents or children age 18 or older who rely on you for financial support). However, their minimum threshold is calculated separately using the lesser of 3% of their net income or the indexed fixed amount.
Smart strategies to maximize your METC
1. Do a quick threshold check before gathering receipts
Before spending time organizing receipts or handing them to your tax advisor, run a simple calculation: estimate your family’s total out-of-pocket expenses for the year and compare them to the minimum threshold for you and your spouse. If your total is below the threshold, your expenses will not generate a tax credit, and you do not need to waste time compiling receipts.
2. If above the minimum threshold: keep your receipts
You do not need to submit your receipts with your tax return. However, the METC is one of the most frequently reviewed line items by the CRA. It is common for the CRA to request proof of expenses post-assessment. Failing to provide appropriate documentation if requested could result in your claims being adjusted or denied.
3. Claim expenses on the lower-income spouse’s tax return
Because the 3% threshold is based on net income, placing all family expenses on the lower-income spouse's tax return can result in a lower threshold to clear, resulting in higher tax savings. Just ensure the lower-income spouse actually owes enough tax for the non-refundable credit to be useful. Because the METC is a non-refundable tax credit, it will not generate a cash refund on its own if tax owing drops to zero.
Example: Family medical tax credit comparison ($6,000 total expenses)
| Strategy | Claimed by Partner A ($150,000 net income) |
Claimed by Partner B ($50,000 net income) |
|---|---|---|
| Total medical expenses | $6,000 | $6,000 |
| 3% of net income | $4,500 | $1,500 |
| Applicable threshold | $2,890 (fixed amount applies) | $1,500 (3% of net income applies) |
| Eligible amount | $3,110 ($6,000 – $2,890) | $4,500 ($6,000 – $1,500) |
| Federal Tax Savings (14%) | $435 | $630 |
(Assumes the lower-income spouse owes enough tax for the credit to be fully utilized).
4. Use the flexible 12-month window
You do not have to limit claims to the calendar year (January 1 to December 31). The CRA allows you to claim medical expenses paid for in any continuous 12-month period3 that ends in the current tax year, provided you haven't claimed those expenses previously.
Example: If you had major dental work in November 2025 and bought hearing aids in March 2026, you can select a 12-month window running from November 1, 2025 to October 31, 2026. Combining major expenses from late last year and early this year into one claim helps you cross the 3% income threshold faster.
Other tax credits to keep on your radar
The disability tax credit (DTC)
Unlike the METC, the disability tax credit is not based on receipts or out-of-pocket spending. It is a flat, non-refundable credit for individuals managing severe and prolonged physical or mental impairments. For the 2026 taxation year, the federal base disability amount is $10,341, providing $1,448 in direct federal tax savings.
To claim the credit, you must be approved by the CRA by submitting Form T2201 (disability tax credit certificate), certified by an authorized medical practitioner (such as a doctor or nurse practitioner). Once approved, the DTC not only reduces your annual tax bill but can also expand what you can claim under the METC (such as certain attendant care costs or specialized therapies) and open the door to long-term wealth tools like the Registered Disability Savings Plan (RDSP).
The Canada Caregiver Credit (CCC)
If you support a family member with a physical or mental infirmity, you may be eligible for this non-refundable tax credit. The credit amount varies based on your relationship to the person receiving support and their net income, among other things. While you do not need an approved Form T2201 (disability tax credit certificate) to claim the CCC, the CRA may request a signed statement from a medical practitioner confirming certain details of the family member's impairment. To learn more about eligibility and amounts you can claim, visit Canada caregiver credit.
The home accessibility tax credit (HATC)
If you are age 65 or older or qualify for the DTC, you may be eligible for a tax credit on renovations that make your home safer and more accessible. Supporting family members who pay for eligible renovations on a qualifying relative's behalf may also be eligible for the HATC.
To qualify, home alterations must be permanent and directly integrated into the residence. Modifications must satisfy at least one of these criteria:
- Allow the qualifying individual to gain access to, or to be mobile or functional within, the dwelling
- Reduce the risk of harm to the qualifying individual within the dwelling or in gaining access to the dwelling
An item you buy that will not become a permanent part of your dwelling is generally not eligible. You can claim up to $20,000 in eligible expenses per year for a qualifying individual. To learn more about eligibility, visit Home accessibility expenses.
Claiming tax credits for your medical expenses can offer immediate savings, but significant out-of-pocket health care costs can also impact your broader cash flow and financial planning strategy. For additional insights on managing health care expenses in retirement, read our article The hidden cost of health in retirement: A wealth planner’s wake-up call. Integrating expected and unexpected medical expenses into your total wealth plan ensures your financial plan remains resilient at every stage of life.
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Low-income working individuals with high out-of-pocket medical expenses may be able to receive actual cash back even if they owe no income tax through the refundable medical expense supplement.
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The 14% federal tax credit rate corresponds to the lowest federal personal income tax bracket rate for the year.
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If you are claiming medical expenses for a person who has died, a claim can be made for expenses paid in any 24-month period that includes the date of death.
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