Here are 10 things to consider this January to save taxes in 2026 … and beyond.
1. Rebalance your non-registered portfolio: If 2025 was a banner year for your non-registered portfolio, there’s a strong likelihood that your target asset allocation may be off. This can be the case if you’re heavily weighted in equities versus fixed income, or you own shares in one or more of the top-performing stocks that now represent a disproportionately large weighting in your portfolio.
If so, now is a great time to rebalance that portfolio by taking profits and realizing those capital gains. For example, if you put in a trade order during the first week of January, any capital gains taxes triggered won’t be due for 16 months, or April 30, 2027, which is the balance due date for 2026.
2. Set up a charitable donation budget: January is also the perfect time to set up a charitable donation budget for the year. Once you decide on a number, consider whether it makes sense to make that contribution now to a donor-advised fund (DAF). This allows you to effectively create a mini-foundation for a fraction of the cost of setting up a private foundation. You get the donation receipt upfront at the time of the gift, and you can then allocate the funds over time to any of Canada’s 85,000-plus registered charities.
If you’re holding appreciated securities in your non-registered portfolio, consider donating them in-kind to your DAF. You will get a receipt equal to the fair market value of the securities donated and you won’t pay any capital gains tax on the accrued appreciation. If you still want to own the stock, buy it back with cash, resetting the adjusted cost base to the current fair market value.
3. Get a head start on your 2026 RRSP contribution: For 2026, you can contribute 18 per cent of your 2025 earned income to your registered retirement savings plan (RRSP) — less any pension adjustment — up to a maximum of $33,810. This maximum is reached if your 2025 income was $187,833 or higher.
4. Contribute to a TFSA: As of Jan. 1, you can now contribute another $7,000 to your tax-free savings account (TFSA). If you’ve never opened up a TFSA, you can immediately contribute a cumulative $109,000, provided you were at least 18 in 2009 and a resident in Canada throughout those years.
5. Make a 2026 RESP contribution: If you’ve got kids, and you’re saving for their postsecondary education, consider contributing at least $2,500 for each kid’s registered education savings plan (RESP) to get the maximum Canada Education Savings Grant of 20 per cent, or $500. If you’ve missed a prior year, consider doubling up — $5,000 per kid — to get $1,000 of grants all at once.
6. Contribute to an FHSA: If you’re a first-time homebuyer who is a resident of Canada and at least 18 years of age, the first home savings account (FHSA) allows you to save on a tax-free basis toward the purchase of a home in Canada. For 2026, you can contribute another $8,000 to your FHSA, and up to $16,000 if you have carry-forward room available.
7. Make your interest tax deductible: The interest you pay on money borrowed to earn business or investment income is generally tax deductible, whereas the interest on consumer debt and your home mortgage is not. Can you make your mortgage interest tax deductible? Perhaps.
Consider selling your non-registered investments to pay off your mortgage (non-deductible debt), and then borrowing back the funds, possibly by getting a secured line of credit on your now fully paid-off home for investment purposes (tax-deductible debt). This allows you to effectively write off what otherwise would have been non-deductible personal mortgage interest.
Of course, you’ll need to factor in any mortgage prepayment penalties and capital gains tax payable before jumping into this strategy.
8. Create pension income: If you’re at least 65, but don’t otherwise have any pension income, consider transferring on a tax-deferred basis up to $14,000 (which is $2,000 per year times seven years from age 65 to age 71) of your RRSP to a registered retirement income fund (RRIF) as early as the year you turn 65. You can then withdraw $2,000 annually from your RRIF, from age 65 through age 71, to take advantage of the annual federal pension income credit.
9. Get organized now for tax season: Tax season may still be a few months away, but take advantage of some downtime this weekend to organize your 2025 tax receipts into categories: medical receipts, donations, business expenses, etc.
This also includes going through your e-mail and either printing or moving tax-related items into a separate electronic “tax” folder to track any electronic donation or medical receipts you received in 2025. While you’re at it, set up your new 2026 folder to stay ahead of the game this year.
10. Avoid a 2026 tax refund: Finally, if you’re an employee who gets a substantial tax refund each year, January is the perfect time to revisit your annual tax strategy. A tax refund is essentially an interest-free loan to the government for up to 16 months. It typically arises when the amount of tax owing on your return is less than the amount of tax withheld during the year.
For employees, the amount of tax withheld is calculated by your employer by taking into account various credits to which you are entitled, but without taking into account a slew of other deductions and credits you may ultimately claim when you file your return, such as RRSP contributions, deductible spousal support payments, interest on money borrowed for investment or business purposes, child-care expenses and charitable donations.
If you expect to have any of these large deductions or credits in 2026, now is the time to complete Canada Revenue Agency’s Form T1213, Request to Reduce Tax Deductions at Source. Send it in and, once approved, you’ll receive a CRA letter to give to your payroll department that will authorize your employer to reduce tax withheld at source for the 2026 tax year, taking into account the deductions and credits listed on the T1213.
Then, instead of waiting until May 2027 to get your 2026 tax refund, you can effectively begin receiving it via each paycheque in 2026 through reduced tax withholding.