Cost-of-living squeeze pushes Canadians to mine their tax returns

Nearly three-quarters of Canadians say they will cut spending in 2026, and most expect their income to fall behind the cost of living even as many leave tax money on the table.  

A new survey commissioned by H&R Block Canada finds that 79 percent of working Canadians are concerned their income is not keeping pace with cost-of-living realities.  

More than half of Canadians (54 percent) worry 2026 is going to be a challenging year for them financially. 

Pressure shows up in everyday budgets.  

Among Canadians that earn an income, 58 percent say that despite making a decent salary, they struggle to make ends meet for everyday expenses such as groceries, gas and household essentials. 

Nearly half of working Canadians (46 percent) say their paycheque only covers day-to-day living costs without money left over. 

Short-term liquidity also looks tight: 35 percent of Canadians say they can’t stretch their paycheque to see them through to their next pay day and often revert to using their credit card, overdraft or bridging loans until the next paycheque arrives. 

Households are already adjusting.  

Given the high day-to-day cost of living, 72 percent of Canadians say they plan to reduce their spending in 2026, and 77 percent of those putting money aside say they are going to put less into savings as a result of higher costs.  

Only 14 percent say they plan to increase spending this year as they are less focused on putting extra cash into savings. 

Even so, more than half of Canadians still manage to save something: 55 percent report that they are currently saving or putting aside money each month, compared to 41 percent who say they are not able to. 

Canadians are divided on their overall sense of financial well-being.  

While 53 percent say they feel good about their current financial situation, 46 percent are not feeling positive.  

Among working Canadians, 62 percent say they live comfortably at their income level, while nearly 4‑in‑10 (38 percent) say they are not living comfortably at their income level. 

Debt remains a concern alongside living costs.  

Despite more recent interest rate reductions, 46 percent of Canadians with debts say they are concerned about their ability to pay off credit cards, loans and/or mortgage repayments. 

Tax season remains one of the few levers Canadians can pull to improve after-tax income, but many do not fully use it. Overall, 65 percent of Canadians say they are expecting a refund this tax season. 

Canadians are split on how well they understand the system: 59 percent say they have a good understanding of all the tax credits and benefits available to maximize their return, while 41 percent are not confident in their understanding. 

Many Canadians feel squeezed as the cost of living outpaces their income, but about two-thirds still expect a tax refund this season, said H&R Block Canada tax expert Yannick Lemay.  

He said that although few people enjoy filing returns, it pays to invest time or expert help to claim all the credits and benefits available.  

He pointed to the company’s Free Second Look program, noting that when H&R Block reviews returns filed elsewhere the previous year, it “on average” finds “about $2,725 of missed money” for roughly 60 percent of clients. 

Some Canadians risk missing out entirely.  

In total, 7 percent say they do not plan to file their taxes, which could mean they miss year-round tax credits and benefits.  

This represents more than 2 million adult Canadians. 

A separate study commissioned by H&R Block Canada in 2025 found low awareness that past filings can be corrected.  

It revealed that 65 percent of Canadians were not aware that you can amend your tax returns from the last 10 years to claim any benefits, deductions or credits that you were entitled to but missed. 

When they learn this, many suspect they have unclaimed amounts.  

The 2025 study found that 38 percent of Canadians believed there are amounts they could still claim. 

More than a third (34 percent) say they are inclined to review prior returns in case they miss any tax benefits, credits or deductions that they were legible for. 

Lemay said many Canadians overlook ways to boost their tax refund and keep more cash in their pockets.  

He said even people with little or no income need to file a return to unlock year-round tax credits and benefits, warning they could otherwise miss out on “hundreds and even thousands of dollars.” 

Out of the more than 400 tax credits and deductions available, H&R Block Canada points to several that Canadians commonly overlook, including: 

• Child Care Expense Deduction, with maximum annual benefits for the July 2025–June 2026 period of 7,997 per child under 6 and 6,748 per child aged 6–17, plus a maximum Child Disability benefit of 3,411 per year per eligible child.  

• Canada Caregiver Credit, where Canadians supporting a spouse, partner, child or dependent with a disability or medical condition can claim up to 8,601 on their 2025 tax return.  

• Canada Workers Benefit, a refundable tax credit for modest-income individuals based on adjusted family net income, for up to 1,633 for single Canadians and a supplement of up to 843 for people with a disability, with amounts varying in Alberta, Nunavut and Quebec.  

• Disability Tax Credit, for individuals with prolonged physical or mental impairments, for up to 10,138 in non-refundable tax credits.  

• Home Accessibility Tax Credit, which covers renovations for seniors (65+) or disabled individuals to improve home accessibility, with a credit of 15 percent (12.5 percent in Quebec) or up to 3,000 (or 2,500 in Quebec) on expenses up to 20,000, including GST/HST.