How the charitable donation credit grows above $200

Two neighbours each give $500 to the same food bank, and their spouses each give another $500 to the same shelter. One couple ends up with a noticeably larger tax credit than the other. Nobody gave more, nobody earns more, and nobody made a mistake. One couple simply put all four receipts on one return.

The reason is a feature of the federal charitable donation credit that is easy to overlook: the first $200 of gifts in a year earns a much lower credit than the rest. Everything else about planning donations follows from that one threshold.

Two donors, the same gifts, different credits

Gifts to registered charities and other qualified donees are claimed on line 34900 of the federal return, using Schedule 9. The credit is non-refundable: it reduces federal tax, not below zero. Unlike most credits, it is not a single flat rate. It has tiers.

The three federal rates

The Department of Finance’s report on the 2026 rate reduction notes that only the first $200 of an individual’s donation claim is subject to the lowest income tax rate. That rate was 15% before the reduction, 14.5% for 2025 and 14% for 2026. Gifts above $200 are credited at a higher rate.

The 29% rate on larger gifts is higher than the tax rate most donors pay on their own income. That is deliberate: it makes larger giving relatively cheaper, and it is why the $200 line matters so much.

A $1,000 year, worked through

The table compares a $1,000 year of giving claimed in different ways, for donors with taxable income below the top bracket.

The same $1,000 produces a federal credit of $260, $230 or $140 depending only on how it is claimed. Each separate claim restarts the low first tier.

Why couples pool their receipts

The CRA says that you or your spouse or common-law partner may claim the credit, which means gifts made by either can be claimed on one return. Putting a couple’s receipts together crosses the $200 line once instead of twice. In the table, that is worth $30 at the federal level for a $1,000 year, plus a provincial difference.

Which spouse should claim? Generally the one with enough tax to use the credit. In the top bracket, the spouse with taxable income above $258,482 may get the 33% rate on part of the gifts. A non-refundable credit claimed on a return with no tax to reduce is simply lost for that year, although unused gifts can be carried forward, as below.

Waiting a year on purpose

Small regular donors face the five-year problem in the table: if every year’s gifts stay at or below $200, everything is credited at the low rate. The rules allow a gift to be claimed in the year it is made or carried forward and claimed in any of the next five years. A donor who gives $150 in 2026 and $150 in 2027 could claim both on the 2027 return: $200 at 14% plus $100 at 29%, a federal credit of $57 instead of $42 for two separate claims.

Carrying forward means waiting for the credit. It also means keeping track of the receipts, because the CRA will only allow each gift to be claimed once.

The limits: 75% of net income, five years

Gifts claimed in a year are generally limited to 75% of net income, with exceptions for certain gifts of capital property and gifts in the year of death. Amounts above the limit, or not claimed, can be carried forward for up to five years (ten for gifts of ecologically sensitive land). The donation date is the date the gift is made, so gifts must be made by December 31 to count for that tax year.

Receipts and qualified donees

Only gifts to qualified donees count, such as registered charities, registered municipalities and the federal or a provincial government, and each needs an official donation receipt. The CRA publishes a searchable list of registered charities. If a donor receives something in return, such as a dinner or tickets, the eligible amount is the gift minus the value of that advantage, and the receipt should show it.

Gifts made through a crowdfunding page to an individual, or to an organisation that is not a qualified donee, do not earn the credit, however worthy the cause.

The provincial credit on top

Each province and territory has its own donation credit, also usually with a lower rate on the first $200. Combined federal and provincial credits on gifts above $200 are substantial in every province. That provincial layer makes pooling and carrying forward worth slightly more than the federal figures above show.

What to check before December 31

Pooling also matters for medical expenses, where the household’s receipts go on one claim but the best choice of claimant often runs the other way. For how credits interact with the brackets, see how the 2026 brackets work.

SOURCES ON FILE

1. Department of Finance Canada — Report on the impact of reducing the lowest marginal rate on non-refundable tax credits — only the first $200 of donations at the lowest rate, which is 14% for 2026.
2. Canada Revenue Agency — Line 34900, who can claim donations — you or your spouse or common-law partner; receipt and qualified donee conditions.
3. Canada Revenue Agency — Line 34900, how much you can claim — 75% of net income and five-year carry-forward.
4. Canada Revenue Agency — Gifts and Income Tax (P113) — donation date, eligible amount and advantage.

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