Guide to T1 Schedule 1 Federal Tax Calculation

Filing your annual income tax return in Canada involves several forms and schedules that work together to determine how much tax you owe or how much of a refund you will receive. Schedule 1, Federal Tax, is one of the most important components. This guide breaks down each section to help you understand what you are claiming and why.

What Is Schedule 1?

Schedule 1 is attached to the T1 General tax return and performs two main functions:

1. Calculates your federal tax by applying progressive tax rates to your taxable income.
2. Calculates your non-refundable tax credits that reduce the amount of federal tax you owe.

The result from Schedule 1 is transferred to your main T1 return, where it combines with provincial tax (calculated on a separate form like BC428) to determine your total tax payable.

Part 1: Federal Tax on Taxable Income

The first section calculates your federal tax based on your taxable income (line 26000 of your T1 return). Canada uses a progressive tax system with federal brackets that are indexed annually for inflation. For 2025, the approximate brackets are:

• 15% on the first $57,375 of taxable income.
• 20.5% on income between $57,375 and $114,750.
• 26% on income between $114,750 and $177,778.
• 29% on income between $177,778 and $253,192.
• 33% on income over $253,192.

You enter your taxable income and calculate the tax based on which brackets your income falls into. If you use tax software such as Wealthsimple Tax or TurboTax, this calculation is done automatically.

Part 2: Non-Refundable Tax Credits

Non-refundable credits reduce the federal tax you owe but cannot generate a refund on their own. If your credits exceed your tax, the excess is generally lost (with some exceptions like tuition credits that carry forward). Here are the main credits:

Basic Personal Amount (Line 30000)

Every taxpayer can claim this credit on the first portion of income that is essentially tax-free. For 2025, it is approximately $16,129. The credit at 15% reduces your federal tax by about $2,419.

Age Amount (Line 30100)

If you are 65 or older, you can claim the age amount, which is approximately $8,790 for 2025. This amount is reduced if your net income exceeds a certain threshold (around $44,325). It is fully eliminated at higher income levels.

Spouse or Common-Law Partner Amount (Line 30300)

If you supported a spouse or common-law partner whose net income was below a threshold (approximately the basic personal amount), you can claim the difference between the basic personal amount and their net income.

Canada Caregiver Amount (Line 30400/30425/30450)

If you supported a dependant with a physical or mental impairment, you may claim the Canada caregiver amount.

Disability Amount (Line 31600)

If you are approved for the Disability Tax Credit (T2201), you claim this amount here. It is approximately $9,428 for 2025. If you cannot use the full amount, it can be transferred to a supporting family member.

Tuition Amount (Line 32300)

If you paid tuition to a qualifying educational institution, you can claim the tuition tax credit. Unused amounts can be carried forward to future years or transferred to a spouse, parent, or grandparent (up to a maximum of $5,000).

Medical Expenses (Line 33099/33199)

You can claim eligible medical expenses that exceed the lesser of 3% of your net income or a set threshold (approximately $2,759 for 2025). This includes expenses for yourself, your spouse, and your dependants.

Charitable Donations (Line 34900)

Donations to registered charities generate a federal tax credit of 15% on the first $200 and 29% (or 33% for high-income earners) on amounts over $200. Keep your official donation receipts for your records.

Other Credits

Schedule 1 also includes lines for CPP/QPP contributions, EI premiums, the Canada employment amount, pension income amount, interest on student loans, and several other credits. Each has specific eligibility rules detailed in the CRA's General Income Tax and Benefit Guide.

Part 3: Net Federal Tax

After calculating your total non-refundable credits and multiplying them by 15%, you subtract that amount from your federal tax calculated in Part 1. Additional adjustments may include the federal dividend tax credit (if you received eligible or non-eligible dividends), the overseas employment tax credit, and the minimum tax carryover. The result is your net federal tax, which is transferred to line 42000 of your T1 return.

How Schedule 1 Connects to Other Forms

Schedule 1 does not exist in isolation. It works alongside several other components of your tax return:

• T1 General: The main tax return form where all income, deductions, and taxes come together.
• BC428 (or your province's equivalent): Calculates your provincial tax and provincial credits.
• Schedule 7: Reports RRSP contributions and Home Buyers' Plan repayments.
• Schedule 11: Calculates tuition, education, and textbook amounts for transfer or carryforward.

Tips for Completing Schedule 1

• Use certified tax software to minimize errors and ensure all credits are claimed automatically.
• Keep all receipts and supporting documents for at least six years in case the CRA requests verification.
• Claim all credits you are entitled to. Many Canadians miss credits like the medical expense credit or the disability amount.
• If you are married or in a common-law partnership, compare the tax benefit of claiming certain credits on either return to maximize savings.
• Review your Notice of Assessment after filing to confirm the CRA processed your credits correctly.

Common Mistakes to Avoid

• Forgetting to claim the basic personal amount (every taxpayer is eligible).
• Not claiming eligible medical expenses because you think they are too small. The threshold may be lower than you expect.
• Missing the disability amount if you have an approved T2201 on file.
• Failing to carry forward unused tuition credits from previous years.
• Not claiming donations made during the year because you lost the receipt. Request a duplicate from the charity.

Related Resources

• How to Fill Out BC428 Provincial Tax Credits
• Guide to T2201 Disability Tax Credit Certificate
• How to File Taxes as a Newcomer to Canada
• How to Fill Out T3012A for RRSP Excess Contributions

Final Thoughts

Schedule 1 is where the core of your federal tax calculation happens. Understanding each section helps you verify that your tax software is capturing all your credits and ensures you are not paying more tax than necessary. Whether you are filing for the first time or reviewing your return for accuracy, taking the time to understand Schedule 1 is a worthwhile investment that can save you money each year.

WelcomeAide is here to support newcomers navigating important life events in Canada. Use our AI Newcomer Navigator for personalized guidance, explore our blog for more newcomer resources, learn about our mission, or discover how to get involved in supporting newcomer communities across Canada.