Disability tax credit (DTC) — who qualifies and how to claim
Credit for mental or physical impairment
Section 118.3 provides a significant non-refundable credit for persons with severe and prolonged impairments in physical or mental functions that markedly restrict basic activities of daily living.
Plain-language explanation
The Disability Tax Credit (DTC) is one of the most significant non-refundable credits for Canadians with disabilities. In 2026, the base credit saves about $1,382 in federal tax ($9,872 × 14%), plus provincial credits.
Eligibility: A person qualifies if they have a severe and prolonged impairment in physical or mental functions. "Prolonged" means lasting or expected to last at least 12 months continuously. "Markedly restricted" means unable to perform a basic activity of daily living more than 90% of the time.
Basic activities of daily living: - Speaking, hearing, walking - Eliminating (bowel and bladder functions) - Feeding and dressing oneself - Mental functions necessary for everyday life
Certification: A qualified medical practitioner must complete Form T2201. The practitioner certifies the nature and severity of the impairment. CRA then approves or denies the certificate.
Transferability: If the person with the disability cannot use the credit (their income is too low), it can be transferred to a supporting parent, spouse, or other family member who supports them.
The supplemental credit: Children under 18 receive an additional "supplement for children" bringing the total federal credit base to $9,872 + $5,758 = $15,630 in 2026 (minus any child care or attendant care already claimed).
Example
Tom has a spinal cord injury and qualifies for the DTC. Federal credit: 14% × $9,872 = $1,382. Ontario provincial DTC: 5.05% × $9,872 = $499. Combined credit: $1,881 per year. Tom also qualifies for the Registered Disability Savings Plan (RDSP).
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
2021 budget expanded DTC eligibility. Criteria for "mental functions necessary for everyday life" broadened. People with Type 1 diabetes, chronic conditions with mental health impacts, and those requiring life-sustaining therapy more than 14 hours/week now more commonly qualify.
Before
Narrow criteria for mental functions; life-sustaining therapy threshold was 14 hrs/week (high bar)
After
Broader eligibility for mental health conditions; life-sustaining therapy threshold reduced to 3.5 hrs/week for Type 1 diabetes
Common questions
How do I apply for the disability tax credit? +
Have a qualified medical practitioner (doctor, nurse practitioner, psychologist, optometrist, etc.) complete and sign Form T2201. Submit it to CRA. CRA reviews and approves or denies. Approved certificates are valid for a specified period (often multiple years). You apply once and can claim the credit annually while the certificate is valid.
Can I transfer the disability credit to my child's parent? +
Yes. If the person with the disability is your dependent child and cannot use the full credit themselves (due to low income), you can transfer the unused portion to yourself or your spouse under s.118.3(2). The child must depend on you for support.
Can someone with depression or anxiety qualify for the DTC? +
Yes, since 2021, more mental health conditions qualify. The test is whether the impairment markedly restricts mental functions necessary for everyday life — judgement, memory, problem-solving, and adaptive functioning. A properly completed T2201 from a qualified mental health professional is key.
Key terms
Related sections
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 118.3. — Read the official text on Justice Canada
These summaries are for educational purposes only and do not constitute legal or tax advice. Speak with a CPA for advice on your specific situation.