Who must claim the child care expense deduction in Canada?

In most cases, the lower-income spouse or common-law partner must claim the child care expense deduction — you cannot choose to have the higher-income partner claim it. If you are a single parent, you claim the deduction yourself. The higher-income partner may only claim the deduction if the lower-income partner was in full-time or part-time education, in hospital or a similar institution for at least two weeks, incarcerated for at least two weeks, or separated from the higher-income partner for at least 90 days due to a breakdown in the relationship.

How much can I deduct for child care expenses in Canada in 2026?

The annual child care expense deduction limits per child are: $8,000 for each child who is under 7 years old at the end of the tax year; $5,000 for each child aged 7 to 16 (or any age if the child has a mental or physical infirmity); and $11,000 for each child who is eligible for the Disability Tax Credit (DTC). The deduction is also limited to two-thirds of the lower-income spouse's earned income — whichever of the annual limit or the earned-income limit is lower is the amount you can deduct.

What child care expenses qualify for the deduction?

Eligible child care expenses include: daycare centres and licensed home daycares; day nursery schools; babysitters and nannies (individual caregivers); day camps and day sports schools; boarding schools (limited to certain weekly amounts); and overnight camps (limited). You cannot claim: clothing, food, or entertainment; tuition at a school where the primary purpose is education; medical or hospital care; transportation to and from a daycare centre; amounts paid to your spouse, common-law partner, or any person you claim as a dependent on your return.

Do I need receipts for the child care expense deduction?

Yes. You must keep receipts for all child care expenses you claim. If you pay an individual caregiver (a babysitter or nanny), CRA requires the caregiver's Social Insurance Number (SIN) on your tax return (Form T778). For institutional providers (licensed daycares, day camps), a receipt showing the provider name, amount paid, and period of care is sufficient. CRA may request your receipts during an audit — keep them for at least 6 years.

Child Care Expense Deduction Canada 2026 — T778 Limits, Eligible Expenses & Who Can Claim

The Child Care Expense Deduction (Line 21400, Form T778) allows Canadian families to deduct qualifying child care costs from income — reducing the tax owed by the lower-income parent. In 2026, the deduction limit is $8,000 per child under age 7, $5,000 per child aged 7–16, and $11,000 per child with a Disability Tax Credit eligibility. The deduction must normally be claimed by the lower-income spouse, and it is capped at two-thirds of that person’s earned income.

Quick answer: The lower-income spouse claims child care expenses on Line 21400 of the T1 return using Form T778. Maximum $8,000 per child under 7. Maximum $5,000 per child 7–16. Eligible expenses include licensed daycare, babysitters, day camps, and boarding schools (with limits). Keep receipts with caregiver SIN if paying an individual.

Child Care Expense Deduction Limits 2026

Child’s Situation	Annual Deduction Limit
Under 7 at December 31, 2026	$8,000 per child
7 to 16 at December 31, 2026	$5,000 per child
Any age — eligible for Disability Tax Credit (DTC)	$11,000 per child
Eligible for DTC, aged 7–16	Higher of DTC limit ($11,000) applies

Earned income cap: Your deduction is also limited to two-thirds of the lower-income spouse’s earned income. The actual deduction is the lesser of the annual limit per child OR two-thirds of earned income.

Example:

Marco and Sarah have two children: Lucas (age 4) and Emma (age 8). Sarah is the lower-income spouse and earned $28,000 in 2026. Total daycare and after-school care costs: $12,000.

Annual child limit: Lucas ($8,000) + Emma ($5,000) = $13,000
Two-thirds earned income: $28,000 × 2/3 = $18,667
Actual deduction: $12,000 (the actual expenses paid, which is less than both limits)

At Sarah’s effective marginal rate of 30% (combined federal + provincial), this deduction saves approximately $3,600 in tax.

What Qualifies as an Eligible Child Care Expense?

Eligible expenses:

Licensed daycare centres and day nurseries
Licensed home daycares
Babysitters and nannies (individual caregivers) — the caregiver’s SIN must be provided
After-school care programmes
Day sports schools and day camps (where the main purpose is childcare)
Boarding schools and overnight camps — limited to $200 per week per child (or $275/week for children eligible for DTC)

Not eligible:

Clothing, food, accommodation (except at boarding school within the allowable weekly amount)
Tuition fees where the primary purpose is education (regular school tuition)
Medical or hospital care
Transportation to/from a care provider
Expenses paid to your spouse or common-law partner
Expenses paid to a person you claim as a dependent (e.g., an older teenage sibling)

Who Must Claim (Lower vs Higher Income Spouse)

In most couples, the lower-income spouse must claim the child care expense deduction. You cannot elect to have the higher-income spouse claim it — the rules are not optional.

When the higher-income spouse CAN claim the deduction:

Situation	Higher-Income Spouse May Claim?
Lower-income spouse in full-time education	Yes — limited to $150/week per child under 7; $75/week for child 7–16
Lower-income spouse in part-time education	Yes — limited to $75/week per child under 7; $37.50/week for 7–16
Lower-income spouse in hospital/institution ≥ 2 weeks	Yes — limited to $150/week per child
Lower-income spouse incarcerated ≥ 2 weeks	Yes — limited to $150/week per child
Separated ≥ 90 days (breakdown in relationship)	Claimant is sole supporting parent — uses lower-income spouse rules

Record Keeping: Receipts and SIN Requirements

CRA requires you to keep receipts for all claimed expenses. Your receipts should show:

Name and address of the care provider
Amount paid
Dates of service
Number of children cared for

Individual caregivers (babysitters, nannies): You must include the caregiver’s Social Insurance Number (SIN) on your T778 form. CRA cross-references this to ensure the caregiver reports the income.

No SIN available: If the caregiver does not provide their SIN, CRA may deny the deduction and the caregiver may face penalties for not reporting the income. Do not pay cash without a receipt and SIN.

How to Claim: Form T778

Complete Form T778 — Child Care Expenses Deduction from CRA
List each eligible expense, the provider name/SIN, and the amount paid per child
Calculate your deduction using the lesser of (1) annual limit per child or (2) two-thirds of earned income
Enter the total on Line 21400 of your T1 return
Keep all receipts — do not submit them, but keep for 6 years in case of review

The deduction reduces your taxable income — it is not a credit. The tax savings depends on your marginal tax rate (federal plus provincial).

Canada Child Benefit (CCB) 2026 — tax-free monthly benefit for families with children
Pension Income Splitting — split eligible pension income between spouses
CA Medical Expense Tax Credit — claim medical and dental costs above the threshold
Ontario Trillium Benefit — refundable credit combining three Ontario credits
CA Taxes Hub — all Canadian tax guides for 2026

The child care expense deduction is one of the most valuable tax breaks available to working Canadian parents. Calculate it before filing to ensure the lower-income spouse claims the maximum allowable amount — and always obtain receipts with caregiver SINs to protect your claim in the event of a CRA review.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

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