By Evelyn Jacks, RWM, MFA, MFA-P, FDFS on July 23, 2026 Estimated reading time: 7 minutes

Newly employed? Know your tax deductions  

By Evelyn Jacks, RWM, MFA, MFA-P, FDFS on July 23, 2026 Estimated reading time: 7 minutes

From home office costs to travel expenses, discover the tax deductions employees may qualify for and how to claim them properly.

Convocations and graduation ceremonies are over and new employment contracts are in place. Now, it’s time to understand the tax consequences—especially when take-home pay is a lot smaller than expected.

Most new employees can benefit from an onboarding process that includes information about claiming reimbursements for out-of-pocket expenses, pension contributions, or how to deduct unreimbursed costs. Here’s a primer to share.

A tax credit for every employee

A non-refundable tax credit is available for all people who report employment income. It’s called the Canada Employment Amount and it’s claimable without receipts to reduce taxes payable. It covers the costs of travelling to and from work, or other personal costs of working, like buying lunches, new shoes, dry cleaning and so on.

For 2026 the maximum claim is $1,501 on the federal tax return.  

Income Tax Guide for Canadians

Deadlines, tax tips and more

What tax forms are needed?

Employees who incur additional expenses out of pocket as a condition of their employment contract will need additional forms:

The employer must confirm those employment conditions on Form T2200 Declaration of Conditions of Employment, which can now include an electronic signature.

The employee will complete Form T777 Statement of Employment Expenses and keep an itemized list of costs.

If the employer is a GST/HST Registrant, a rebate for the GST/HST portion of costs may be claimable on Form GST370.  

Allowable deductions are slightly different in different sectors. Those earning commissions can claim additional deductions over those who earn salary only. Eligible educators, truckers, musicians, artists, forestry workers, personal support workers, as well as some tradespeople and construction workers can make claims with various nuances.  

Some claims are limited to the employment income (or commissions earned). Some qualify for carry forwards white others don’t. The common thread? In each case, receipts, logs, and details are required, as well as verification from the employer that the costs are necessary and any........

© MoneySense