How Does the Medical Expense Tax Credit Work?
Eligible medical expenses above a threshold produce a non-refundable credit. Two choices decide how much you actually get: which spouse claims, and which 12-month period you claim for — and both are commonly left to default.
- The answer:: The credit applies to eligible expenses exceeding the lesser of a fixed amount and a percentage of net income.
- The trap:: Claiming on the higher earner's return. Because the threshold is income-based, the same expenses clear a lower bar on the lower-income spouse's return.
- The recommendation:: Pick any 12-month period ending in the tax year, which lets you group expenses that straddle a year end into one claim.
Where the AI summary above gets this wrong
"Claim medical expenses on the higher-earning spouse's return to get the bigger refund."
That's surface-true. Here's what it misses:
- The threshold is income-based — Expenses only count above the lesser of a fixed amount and a percentage of net income, so a lower income means a lower bar and a larger claim.
- The period is not the calendar year — You may choose any 12-month period ending in the tax year, which is how expenses spread across a year end get combined.
- Eligible costs are broader than expected — Premiums for private health plans, travel for treatment and many attendant-care costs qualify, alongside the obvious prescriptions and dental work.
01 How the threshold works
Only expenses above a threshold count, and that threshold is the lesser of a fixed dollar amount and a percentage of the claimant's net income. The structure means the same pile of receipts produces a different credit depending on whose return it lands on.
For most couples the lower-income spouse has the lower threshold, so more of the expenses clear it. That is why the default of putting everything on the higher earner's return usually costs money rather than saving it.
02 Choosing the period
The claim covers any 12-month period ending in the tax year, not the calendar year. That flexibility exists to let you group expenses sensibly rather than have a year end split a course of treatment in half.
Someone with a large dental bill in November and another in February can choose a window that captures both, clearing the threshold once instead of failing to clear it twice. Picking the period deliberately is the second free decision in this credit.
Shows: what a given amount of additional taxable income costs you in tax at your marginal rate, and what you keep. Ignores: provincial surtaxes, credits that phase out with income, and any effect on income-tested benefits.
Source: Disability tax credit (DTC)
03 What actually qualifies
The eligible list is broader than most people assume. Alongside prescriptions, dental work and medical devices, it includes premiums paid to private health plans, travel costs where treatment is not available locally, and many attendant and care costs.
Where a disability is involved the credit also sits alongside the disability tax credit, which is a separate claim with its own certification. Claiming one does not claim the other, and both are commonly missed together.
The twelve-month period is also chosen rather than fixed. A claim may cover any twelve consecutive months ending in the tax year, so expenses can be grouped into whichever window captures the most, which matters where a large course of treatment straddles a December and would otherwise be split across two thresholds.
This is the credit where the default answer is most often the wrong one. Software and habit both push the claim onto the higher earner because that feels like where tax is paid, and the income-based threshold quietly means the opposite. It costs nothing to run it both ways before filing, and I have yet to see a couple for whom that took more than ten minutes.
FAQ
Which spouse should claim medical expenses?
Usually the lower-income spouse. The threshold is the lesser of a fixed amount and a percentage of net income, so a lower income means a lower bar and more of the expenses generate a credit.
Does the claim have to follow the calendar year?
No. You may claim for any 12-month period ending in the tax year, which lets you group expenses that straddle a year end into a single claim and clear the threshold once.
What counts as an eligible medical expense?
More than most people expect. Prescriptions, dental work and devices are obvious, but premiums paid to private health plans, travel for treatment unavailable locally, and many attendant-care costs also qualify.
Sources
Regulator references
- Canadian income tax rates for individuals · Canada Revenue Agency · 2025The federal and provincial rate brackets a withdrawal is taxed against.Last verified: 2026-09-07
- Disability tax credit (DTC) · Canada Revenue Agency · 2025The DTC criteria, its certification requirement and retroactive claims.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.