Insurance-Based Tax Deductions You May Be Missing in 2025

Tax season is here, and with the 2025 filing deadline landing on Wednesday, April 30, Canadians are once again sorting through receipts, paperwork, and online forms. If you’re self-employed or your spouse or common-law partner is, you’ve got a little more breathing room, with your deadline extended to June 15, 2025.

Whether you handle your taxes or work with an accountant, understanding what qualifies as a deductible can significantly maximize your return. One area many people overlook? Insurance premiums. Some policies you’ve been paying for might be partially deductible, depending on your situation.

Let’s take a closer look.

What Kind of Insurance Can Be Claimed?

Insurance policies are part of everyday life—car, home, health, and life coverage. However, only certain premiums may qualify as deductions or credits, depending on whether you’re self-employed or earning employment income.

Health and medical insurance is the most commonly deductible category, especially for small business owners and sole proprietors. If you pay into a private plan, the CRA may allow you to claim those premiums as a business expense.

Other eligible medical expenses, such as travel for necessary treatment or the added cost of gluten-free products for individuals with celiac disease, can also be claimed. The medical expense tax credit covers these costs. It’s always worth checking the CRA website to confirm eligibility.

Self-Employed? You May Have More Options

If you run a business or do freelance work, here are some deductions to keep in mind:

Car Insurance & Expenses:
Are you using your vehicle for work? If so, you can claim a percentage of your car insurance, fuel, and maintenance costs based on business use. Just make sure to keep a detailed log of your mileage.

Home Insurance (If You Work From Home):
Have a dedicated workspace at home? You can deduct a portion of your home insurance under business-use-of-home expenses. The percentage is typically calculated based on the square footage of your workspace.

Rental Property Insurance:
Own a rental unit? You can deduct the entire insurance cost for that property. Only a proportional amount is claimable if it’s just part of your primary residence (like a basement suite).

Life Insurance:
In most individual cases, life insurance isn’t tax-deductible. There are limited situations where business owners offering group policies might qualify, but this isn’t an option for most self-employed individuals.

Don’t Leave Money on the Table

Beyond insurance, there are other innovative ways to increase your return in 2025, such as RRSP contributions, claiming all allowable business expenses, and checking to see if you qualify for refundable credits like the Canada Workers Benefit.

Tax season doesn’t have to be overwhelming. Speak to a licensed accountant and contact your Merit Insurance broker with any questions about your coverage. A little planning can go a long way.