CRA Says Claim Medical Expenses on the Lower Earner. Ontario’s Surtax Says Otherwise
The medical expense tax credit puts one question to a couple at filing time: whose return do the receipts go on? The Canada Revenue Agency’s own guidance points to the spouse with the lower net income, and on a modest bill that is the right answer. For an Ontario couple with net incomes of $55,000 and $130,000, it stops being the right answer at a family medical bill of $11,229.
Two forces pull in opposite directions. The credit is ground down by 3% of the claimant’s income, which favours the lower earner. Ontario subtracts its non-refundable credits on form ON428 before it charges its surtax, which makes the Ontario half of the same credit worth up to 56% more to a spouse whose basic Ontario tax has cleared $7,446. The first advantage is a fixed dollar amount, the second grows with the size of the bill, and where they cross depends on the couple.
How the credit is built, and why the lower earner looks right
The formula in Income Tax Act section 118.2(1) is A x [(B – C) + D]. A is the lowest federal bracket rate, 14% for 2026. B is the claimant’s medical expenses for themselves, their spouse or common-law partner, and their children under 18. C is the grind: the lesser of $1,813 and 3% of the claimant’s income for the year. The $1,813 is the unindexed figure printed in the Act. Indexed under the CRA’s indexation adjustment for personal income tax and benefit amounts, the ceiling is $2,890 for 2026, up from $2,834 for 2025, $2,759 for 2024 and $2,635 for 2023.
So a spouse at $55,000 of net income writes off 3% of it, $1,650, before anything counts, while a spouse at $130,000 writes off the whole $2,890 ceiling. That is the case for the lower earner, and the CRA makes it on its page for lines 33099 and 33199, eligible medical expenses:
It may be better for the spouse or common-law partner with the lower net income (line 23600) to claim the eligible medical expenses.
The CRA’s own example on that page runs on 2025 figures, when the ceiling was $2,834. Richard and Pauline have a combined family bill of $6,300. Pauline’s net income is $55,000, 3% of which is $1,650, less than the ceiling, so she could claim $6,300 less $1,650, or $4,650. Richard’s net income is $42,000, 3% of which is $1,260, so he could claim $5,040. We rebuilt the statutory formula in code and it returns both of those numbers exactly, which is the check that the arithmetic in the tables below is the CRA’s arithmetic rather than ours.
One constraint before the Ontario side. By paragraph (c) of the description of B, an expense cannot be claimed if it is already counted by any other taxpayer in any year. The same expense cannot be claimed twice.
Everything here turns on each spouse’s net income at line 23600, and for couples with eligible pension income that input is partly movable. Pension income splitting shifts up to half of it across the two returns, moving the grind and the surtax band at once, so it is worth settling before the receipts question.
Ontario subtracts its credits before it charges its surtax
Ontario’s surtax, quoted from the January 2026 edition of the CRA’s T4032ON payroll deductions tables, is nil where basic provincial tax payable is $5,818 or less. Between $5,818 and $7,446 it is 20% of the amount over $5,818. Above $7,446 it is 20% of the amount over $5,818 plus a further 36% of the amount over $7,446.
What matters is where that sits on the form. On ON428, Ontario non-refundable tax credits come off at line 52 to give line 53, and the surtax block starts further down at line 63. A credit therefore does two jobs: it cuts Ontario tax, and it shrinks the base the surtax is charged on. The multiplier on any Ontario non-refundable credit is 1.00 in the first band, 1.20 in the second and 1.56 in the third. The same line order is why Ontario’s 11.16% rate on gifts above $200 really works out to 17.41%, which we take apart in our piece on the charitable donation credit.
Ontario’s medical ceiling is its own number, $2,885 at ON428 line 40 on the 2025 form, the latest published. Ontario’s credit rate is 5.05% and its basic personal amount for 2026 is $12,989. The CRA’s Ontario tax information page states that the expenses claimed on ON428 line 58689 “are the same as those you can claim on line 33099 of your return”, subject to Ontario’s own maximums, so the federal and Ontario halves of one claim cannot be sent to different spouses. That is what makes this one decision instead of two. The Ontario health premium is added at line 89, after credits, so no credit reduces it.
The 14% rate and the 3% grind work the same way on a return filed anywhere in Canada. The multiplier stacked on top of them is Ontario’s own.
What a dollar of claimable expense is worth in Ontario
The figures below and in every table that follows are our calculations on the CRA’s own formula: income tax only, 2026 rates, net income taken equal to taxable income, and the basic personal amount as the only credit. An employee also claiming the CPP base contribution and the EI premium, worth $4,642.52 of credit amounts at the 2026 maximums, subtracts those before the surtax as well, and so reaches the 20% band at $97,464 rather than $94,901 and the further 36% at $113,910 rather than $111,810. The same code reproduces Ontario’s top combined marginal rate of 53.53%, which is 33% plus 13.16% multiplied by 1.56.
| Taxable income | Multiplier on the Ontario credit | Each dollar past the grind is worth |
|---|---|---|
| Below $94,901 | 1.00 | 19.05% |
| $94,901 to $111,810 | 1.20 | 20.06% |
| Above $111,810 | 1.56 | 21.878% |
Source: our arithmetic on the ON428 line order and the T4032ON surtax formula. Each rate holds until the credit itself pulls the claimant into a lower surtax band.
$94,901 is the taxable income at which basic Ontario tax reaches $5,818, and $111,810 is where it reaches $7,446. The top step, 21.878%, is 14.85% more than the 19.05% that 14% plus 5.05% implies.
For a $55,000 and $130,000 couple, the crossover is a bill of $11,229
Take an Ontario couple with net incomes of $55,000 and $130,000 in 2026. The lower earner grinds off 3% of $55,000, or $1,650, and sits below the surtax entirely. The higher earner grinds off the full $2,890 ceiling and sits in the 1.56 band. Claimed is the amount entered on line 33099 after the grind; saved is the combined federal and Ontario income tax avoided. The $11,229 uses the federal 2026 ceiling of $2,890 and Ontario’s $2,885 from the 2025 ON428.
| Family bill in one 12-month period | Lower earner claims | Lower earner saves | Higher earner claims | Higher earner saves |
|---|---|---|---|---|
| $3,000 | $1,350 | $257.17 | $110 | $24.46 |
| $5,000 | $3,350 | $638.17 | $2,110 | $462.02 |
| $8,000 | $6,350 | $1,209.67 | $5,110 | $1,118.36 |
| $11,229 | $9,579 | $1,824.80 | $8,339 | $1,824.80 |
| $12,000 | $10,350 | $1,971.67 | $9,110 | $1,993.48 |
| $16,000 | $14,350 | $2,733.67 | $13,110 | $2,868.60 |
| $20,000 | $18,350 | $3,495.68 | $17,110 | $3,743.72 |
| $30,000 | $28,350 | $5,400.68 | $27,110 | $5,931.52 |
Source: our arithmetic on the CRA formula, 2026 federal and Ontario rates.
Be honest about the size of the prize. At $12,000 the higher earner is ahead by $21.80, which is nothing. The advantage is worth $248.04 at a $20,000 bill and $530.84 at $30,000. The decision starts to matter when the bill is large.
The crossover moves with the couple: $8,198 at $70,000 and $160,000, $13,250 at $45,000 and $250,000.
Above about $96,000 each, the lower-income rule buys nothing
The grind is the lesser of 3% and the ceiling, so it stops growing once 3% of net income passes the ceiling. That happens at $96,333 of net income federally, $2,890 divided by 0.03, and $96,167 for Ontario on its $2,885 ceiling. Above those levels both spouses grind off the identical amount and only the multiplier is left. For a $100,000 and $180,000 couple our engine puts the crossover at $2,885, which is simply the grind itself: anything claimable at all is better claimed by the higher earner.
On line 33199 the dependant’s income sets the threshold
Line 33199, the line for expenses paid for other dependants, is the starker case. Read the statute carefully. For each dependant the claim is E less F, and F is the lesser of $1,813 and 3% of the dependant’s income, not the claimant’s. The CRA says the same thing in plain words on its own page, noting that a couple deciding who should claim expenses for an adult dependant “will have to make the same calculation using Rob’s net income.”
That changes the whole decision. The threshold does not move with the claimant, so the lower earner has no advantage to offer and the multiplier decides outright. For a dependant with no income there is no grind at all and the whole bill is claimable federally, whoever claims it. Ontario stops sooner: under ON428 line 58729 on the 2025 form, the latest published, “the maximum amount you can claim is $15,551 for each dependant.” There is no equivalent cap on the federal line.
| Bill for the dependant | Ontario can claim | Lower earner at $55,000 saves | Higher earner at $130,000 saves | Higher earner ahead by |
|---|---|---|---|---|
| $5,000 | $5,000 | $952.50 | $1,093.90 | 14.8% |
| $15,000 | $15,000 | $2,857.50 | $3,281.70 | 14.8% |
| $20,000 | $15,551 | $3,585.33 | $4,025.11 | 12.3% |
| $30,000 | $15,551 | $4,985.33 | $5,425.11 | 8.8% |
Source: our arithmetic on the CRA formula, 2026 federal and Ontario rates, dependant with no income, Ontario’s $15,551 per-dependant maximum applied.
The higher earner’s lead is 14.8% while the whole bill is claimable in both jurisdictions, and it narrows above $15,551 because only the federal half of each further dollar still counts. There is no crossover anywhere, because there is nothing to cross: the higher earner is ahead at every size in the table. The CRA prints its lower-net-income hint under line 33199 as well as line 33099, and line 33199 is where it does the least good.
Two limits run the other way
A non-refundable credit cannot create a refund, and that caps what the lower earner can deliver on a catastrophic bill. Total federal and Ontario income tax payable at $55,000 of net income is $7,563.74 on our arithmetic. A $45,000 bill claimed on that return saves $7,563.74, and so does a $60,000 one. The return runs out of tax and everything past that point is lost on that return.
The second limit cuts against whoever is deep enough into a surtax band for their own claim to pull them out of it, higher earner or not. At $120,000 of net income, basic Ontario tax is $8,360.05 on the same basis. An Ontario credit built on $18,100 of claimable expenses pulls that down to the $7,446 threshold, which corresponds to a family bill of $20,985. Past that point the 1.56 multiplier stops applying to the rest of the claim and the claim quietly devalues itself. For a $120,000 and $200,000 couple, $20,985 is exactly where the two claims stop being identical and the higher earner pulls ahead.
The window is a fixed prize, the claimant choice grows with the bill
Paragraph (d) of the description of B lets the claim cover any 12-month period ending in the tax year, not the calendar year. The grind applies once per claim period, so bills that straddle a year end get ground twice if they are claimed separately.
At $55,000 of net income, where the grind is $1,650 per period, $1,800 paid late in one year and $1,800 paid early in the next produce $150 plus $150, or $300 of claimable expense, if each is claimed in its own calendar year. The same $3,600 inside a single 12-month period produces $1,950. That is $1,650 of claimable expense gained by choosing a window, which is $314.33 of tax. Split $4,000 and $1,500 the same way and it is $2,350 against $3,850 pooled, a difference of $1,500 of claimable expense, or $285.75 of tax.
Paragraph (b) of the same description bars any expense already counted in a preceding year, so last year’s window has used up some receipts. And on the CRA’s Ontario tax information page the expenses claimed “have to cover the same 12-month period” and “must be expenses that were not claimed” for the prior year, so one window covers the whole return, not receipt by receipt.
The gain from the window is capped by the grind, which is why it comes to about $300 of tax here whatever the bill: a $9,000 and $6,000 split pooled into $15,000 recovers the same $1,650 of claimable expense, or $314.33. The claimant decision starts smaller and keeps growing. On those same pooled bills, for the couple above, the better claimant is worth $215.75 at $3,600, $162.02 at $5,500, $106.64 at $15,000 and $530.84 at $30,000. The window wins on small bills, the claimant choice wins on large ones, and the two are the same order of magnitude throughout. It is the piece’s main finding in another form: a fixed advantage set against a growing one.
For lower-income households the credit can pay cash
There is also a refundable version at line 45200, the refundable medical expense supplement, which pays out whether or not there is tax to offset. For 2026 the maximum is $1,534, the minimum earnings threshold is $4,478, and family net income above $33,960 begins to reduce it. It belongs to households well below the incomes in the tables above.
What a family should settle first
Pool the receipts into the best 12-month window, then run both returns. If both spouses are above roughly $96,000 of net income, or the expenses were paid for an adult dependant on line 33199, the higher earner claims and the CRA’s hint does not apply. Below that, the lower earner is right up to the crossover, and that crossover has a closed form: the bill at which the two returns tie is $22,343.72 less 6.7362 times the lower earner’s grind, 3% of their net income. A grind of $1,650 gives $11,229, $2,100 gives $8,198 and $1,350 gives $13,250, each matching our engine to the dollar. It holds while the lower earner’s basic Ontario tax is under $5,818, the higher earner is over $7,446 and past the ceiling, and neither claim is large enough to exhaust the claimant’s tax or drop them a band.
The surtax multiplier is not specific to medical receipts. It applies to every Ontario non-refundable credit, so the gap between a credit’s stated rate and what it actually saves runs through all of them. Our guide to how investment income is taxed in Canada sets out how Ontario’s brackets, credits and surtax fit together.
Figures in this article are for the 2026 tax year unless labelled otherwise, built from the Income Tax Act current to September 21, 2026 and CRA documents retrieved October 13, 2026. The ceiling, the brackets and the surtax thresholds all move with indexation.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. The credit formula, the 3 percent grind, the dependant’s-income threshold on line 33199 and the 12-month period are from Income Tax Act section 118.2(1) on Justice Laws, act current to September 21, 2026. The indexed ceilings of $2,890 for 2026, $2,834 for 2025, $2,759 for 2024 and $2,635 for 2023, and the refundable supplement figures, are from the CRA’s Indexation adjustment for personal income tax and benefit amounts. The 2026 federal and Ontario brackets and the 14 percent lowest federal rate are from the CRA’s current year rates and brackets. The Ontario surtax thresholds and the Ontario basic personal amount are from CRA T4032ON, January 2026. Ontario’s $2,885 medical ceiling, the 5.05 percent credit rate and the ON428 line ordering are from Form ON428 (5006-C) for 2025, the latest published. Every multiplier, breakpoint, crossover, saving and table row is our own arithmetic on those sources, income tax only, with net income taken equal to taxable income. CRA and Justice Laws documents retrieved October 13, 2026. The 2026 CPP base contribution maximum of $3,519.45 and the maximum annual EI employee premium of $1,123.07 are from the same T4032ON. Figures are computed with the basic personal amount as the only credit unless stated otherwise. Ontario’s $15,551 per-dependant maximum at ON428 line 58729 is from the same 2025 CRA Ontario tax information page as the $2,885 ceiling.
