Non-refundable credits — basic personal amount, disability, age, spousal
Personal credits
Section 118 provides non-refundable tax credits for the basic personal amount, spousal/partner amounts, eligible dependants, disability, age (65+), and other personal circumstances.
Plain-language explanation
Section 118 converts personal amounts into non-refundable tax credits by multiplying the amount by the lowest federal rate (14% in 2026). "Non-refundable" means the credits reduce tax you owe but cannot generate a refund if they exceed your tax.
Key credits under s.118:
*Basic personal amount (BPA) — s.118(1)(c):* Every individual gets a BPA of $16,452 in 2026 (for most taxpayers; it phases down to $14,960 for income above $181,440). Credit: 14% × $16,452 = $2,303.
*Spousal amount — s.118(1)(a):* If your spouse or common-law partner earns less than the BPA, you can claim a credit on the difference.
*Eligible dependant — s.118(1)(b):* For a parent who is single, separated, or divorced and supports a child or other dependent in their home.
*Age amount — s.118(2):* Individuals 65+ get an additional credit (phased out at higher incomes).
*Canada caregiver credit — s.118(1)(b.1), (d):* For supporting an infirm dependent.
*Disability amount — s.118.3:* Requires a certified disability certificate (T2201). A significant credit: 14% × $9,872 in 2026.
These credits simply reduce your tax bill — they do not affect your income.
Example
Sarah, age 72, has $45,000 income. Her credits: BPA ($16,452), age amount ($8,396 reduced by income phase-out). Total credit base: ~$22,000. Federal credit: 14% × $22,000 = $3,080. This is subtracted from her basic federal tax.
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
Enhanced BPA announced in 2019 budget. The basic personal amount is being increased to $15,000 by 2023, phased in over 2020–2023. Higher-income taxpayers receive a smaller enhanced amount (phased down between the 4th and 5th federal brackets).
Before
$12,298 (2019 BPA), same for all taxpayers
After
$15,705 (2024 BPA for most taxpayers); phases down to $14,156 for income above $173,205
Disability Tax Credit (DTC) eligibility expanded. Budget 2021 broadened the DTC to include mental functions of everyday life and eased the "markedly restricted" standard for some conditions. More people with chronic conditions, Type 1 diabetes, and mental health impairments now qualify.
Before
Narrow definition of mental functions; stricter "markedly restricted" standard
After
Broader definition; mental health conditions and daily life functions explicitly included
Common questions
What is the basic personal amount for 2026? +
$16,452 for most taxpayers (incomes under $181,440). The BPA phases down to a minimum of $14,960 for incomes above $246,752. Each province also has its own BPA, applied against provincial tax.
What is the disability tax credit? +
A non-refundable credit under s.118.3 for persons with severe and prolonged impairments in physical or mental functions. Requires a certified T2201 from a qualified medical practitioner. The base federal credit in 2026 is 14% × $9,872 = $1,382.
Can non-refundable credits generate a refund? +
No. "Non-refundable" means they can reduce your tax to zero but no further. If you have $500 of tax owing and $700 in credits, you owe $0 — the extra $200 of credits is lost. Refundable credits (like the GST credit or Canada Workers Benefit) can generate a refund.
Key terms
Related sections
Related calculators
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 118. — 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.