Donation or medical expense credit: why $2,000 earns very different amounts
Both credits come off your tax rather than your income, but they work very differently. A donation starts earning from the first dollar and earns more above $200. A medical expense earns nothing until you pass a threshold tied to your income, and then earns at the lowest rate.
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Why is the donation credit bigger than the medical expense credit?
The donation credit pays 14.5% federally on the first $200 and 29% above it, plus the province's rates, with no threshold. The medical credit pays the lowest rate, 14.5% federally, only on expenses above the lesser of 3% of net income and $2,834. An Ontario resident with $50,000 of net income gets $761.98 for $2,000 of donations and $97.75 for $2,000 of medical expenses.
The same amount, two credits
These are Ontario figures for the 2025 tax year, the latest with published forms. The donation figure is the federal and Ontario credit, and the medical figure is the federal and Ontario credit after the 3% of net income threshold. Both are non-refundable.
| Net income | Amount | Donation credit | Medical expense credit |
|---|---|---|---|
| $50,000 | $500 | $159.58 | $0.00 |
| $50,000 | $2,000 | $761.98 | $97.75 |
| $50,000 | $5,000 | $1,966.78 | $684.25 |
| $120,000 | $500 | $159.58 | $0.00 |
| $120,000 | $2,000 | $761.98 | $0.00 |
| $120,000 | $5,000 | $1,966.78 | $420.88 |
Work out your own with the donation tax credit calculator and the medical expense tax credit calculator.
The threshold is the difference
The medical credit applies only after a threshold, the lesser of 3% of net income and a fixed amount, which is $2,834 for the federal credit in 2025 and a different figure in each province. At $50,000 of net income the threshold is $1,500, so the first $1,500 of expenses earns nothing. The donation credit has no equivalent, and its rate jumps to 29% federally after the first $200.
Which year to claim
Donations can be claimed in the year they are made or carried forward up to five years, up to 75% of net income in a year. Medical expenses can be any 12-month period ending in the tax year, as long as they were not claimed before. In both cases claiming in a year when your income, and so your tax, is higher can be worth more, but check the limits first.