Donation tax credit.
Combined tax credit
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Your breakdown
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A two-rate credit that rewards giving more
Canada encourages charitable giving through a non-refundable tax credit, and it is deliberately structured so that the more you give, the higher the rate on the extra dollars. The first $200 of donations in a year earns a federal credit at the lowest rate of 15 percent. Everything above $200 earns 29 percent federally, rising to 33 percent for donors whose income reaches the top federal bracket. On top of the federal credit, every province grants its own donation credit at provincial rates, so the combined benefit is meaningfully larger than the federal figure alone.
This tool combines both layers. It applies the low combined rate to the first $200 and the high combined rate to the remainder, using representative provincial rates of about 6 percent on the first band and 11.5 percent above it. The output is the total tax you save and, just as usefully, the real after-credit cost of your gift, which is the number that actually matters when you decide how much to give.
Why the first $200 is worth getting past
The step up from the low rate to the high rate after $200 is the single most important feature of this credit. It means small annual donations are credited least generously, while sustained giving is rewarded. There is a well-known planning move that exploits this: a couple can pool their donation receipts on one spouse’s return, since the Income Tax Act lets either partner claim the household’s gifts. Combining receipts pushes more of the total into the high-rate band rather than each person crossing the $200 threshold separately.
A $2,000 donation, broken down
Take a $2,000 gift. The first $200 is credited at the combined low rate of about 21 percent, worth $42. The remaining $1,800 is credited at the combined high rate of about 40.5 percent, worth $729. Together that is a $771 credit, which means a $2,000 donation really costs you $1,229 once the credit is applied.
The effective subsidy on this gift is about 38.6 percent, but notice it is not flat: the first $200 is subsidized far less than the dollars above it. Provincial rates swing the result. Quebec, with its own tax system and donation credit, and the higher-rate provinces produce a larger credit than Alberta does, so the exact figure depends on where you file. The structure, low band then high band, is the same everywhere.
The smartest way to give is often not cash
The most tax-efficient gift for many donors is not a cheque at all but appreciated publicly traded securities donated in kind. When you donate qualifying stocks, ETFs or mutual funds directly to a registered charity, the capital gain on those securities is exempt from tax entirely, and you still receive the full donation credit on their fair market value. You avoid the tax you would have paid on the gain and get the credit, which is why high earners with appreciated holdings should think twice before selling and donating cash. You also need the receipt: only gifts to CRA-registered charities qualify, and you must keep official donation receipts.
This calculator is for an individual deciding how much to donate before year end, a couple working out which partner should claim the receipts, and anyone weighing a cash gift against a gift of shares. A practical edge case worth knowing: you do not have to claim donations in the year you make them. Unclaimed donations can be carried forward up to five years, so it can pay to bunch several years of giving into one claim to keep more of the total in the high-rate band rather than spreading thin amounts that never clear $200.
Is the donation credit refundable?
No. The charitable donation credit is non-refundable, meaning it can reduce your tax payable to zero but will not generate a refund beyond the tax you owe. If your tax bill is small, you may not be able to use the full credit in one year, which is exactly why the five-year carry-forward exists. A donor with little or no taxable income gets little immediate benefit, so timing gifts to a year with higher income can be the difference between using the credit and wasting it.
Can both spouses claim part of the same donation?
You can split the household’s donations between spouses, but it is usually better to pool them on one return. Because the higher 29 percent or 33 percent federal rate only applies above $200, combining all receipts on a single spouse’s return pushes more of the total into that higher band, rather than each spouse claiming a separate first $200 at the lower 15 percent rate. The CRA permits either partner to claim gifts made by either of them, so couples should run it both ways and pick the larger credit.