Starting with the 2026 tax year, the labour mobility deduction for tradespeople is worth up to $10,000 a year, up from $4,000. A worker now qualifies when their temporary lodging is at least 120 km closer to the job site than their home, down from 150 km. Both changes are law. They come from Bill C-30, the Spring Economic Update 2026 Implementation Act, which received Royal Assent on June 18, 2026.
Construction workers who travel for out-of-town jobs will claim it on their 2026 personal tax returns next spring. If your business sends crews away for work, this is the year to tell them about it, because a 120 km rule brings many more job sites into range.
What changed, when, and who it affects
- The change: The annual limit on deductible relocation expenses rises from $4,000 to $10,000. The minimum distance falls from 150 km to 120 km.
- When it applies: The 2026 and later taxation years. The $10,000 limit is to be indexed to inflation starting in 2027. The 2027 figure has not been published yet.
- Status: Enacted. Bill C-30 passed third reading and received Royal Assent on June 18, 2026 (Statutes of Canada 2026, chapter 22). It is not a proposal.
- Who it affects: Employed tradespeople and apprentices who do construction work and temporarily relocate for it. The deduction is claimed by the worker on their own return, not by the employer.
Sources: Parliament of Canada: Bill C-30, Royal Assent text, Department of Finance Canada: Legislation passes to implement measures from the Spring Economic Update 2026 and Spring Economic Update 2026: Tax measures, supplementary information.
Labour mobility deduction 2026: the numbers
| Rule | 2022 to 2025 | 2026 onward |
|---|---|---|
| Annual limit on eligible expenses | $4,000 | $10,000 (indexed to inflation from 2027) |
| Temporary lodging must be closer to the work site than home by at least | 150 km | 120 km |
| Cap per relocation | 50% of employment income from that relocation | 50% of employment income from that relocation (unchanged) |
| Minimum time away from home | 36 hours | 36 hours (unchanged) |
| Where it is claimed | Form T777, line 22900 | Form T777, line 22900 (unchanged) |
The deduction is the lowest of three numbers: the eligible expenses, 50% of the employment income earned at the temporary work location, and the annual limit.
Sources: CRA: Employment Expenses guide (T4044) and Library of Parliament: Legislative Summary of Bill C-30.
Who qualifies for the labour mobility deduction
All of the following must be true:
- You are an eligible tradesperson. You earn employment income as a tradesperson or apprentice, and the work is a construction activity. The CRA describes construction broadly: erecting, excavating, installing, altering, repairing, improving, demolishing or removing all or part of a building or structure, surface or sub-surface construction, or similar property.
- The move is temporary and for that work. You relocate so you can do your job at one or more temporary work locations in the same area.
- You had a home in Canada before the move, and you were required to be away from it for at least 36 hours.
- You took up temporary lodging in Canada that is at least 120 km closer to each temporary work location than your ordinary residence (150 km before 2026).
Who is outside it: self-employed contractors (the deduction applies to employment income), people working outside construction, and permanent moves. A permanent move for work is a moving expense under line 21900, not a labour mobility claim, and the same expense cannot be deducted twice.
Sources: CRA: Labour Mobility Deduction (LMD) and CRA T4044.
What expenses count
- Transportation and meals for one round trip between your home and the temporary lodging, per relocation.
- Temporary lodging near the work site, only while you keep your home available for your own use and do not rent it out to anyone else.
The general rule for employment expenses still applies: costs your employer reimburses, or covers with a non-taxable allowance, are not yours to deduct.
Worked examples for 2026
A job site that did not qualify before. An apprentice's temporary lodging is 130 km closer to the job site than their home. Under the old 150 km rule they had no claim. In 2026 they qualify. They spend $9,000 on eligible lodging and travel, and earn $30,000 from that job. The 50% cap is $15,000 and the annual limit is $10,000, so they deduct the full $9,000.
A bigger claim that hits the limit. A journeyperson spends $14,000 on an out-of-town job and earns $40,000 there. The 50% cap is $20,000, but the annual limit is $10,000, so the 2026 deduction is $10,000. Under the old rules it would have stopped at $4,000.
A short job where income is the limit. A worker spends $6,000 on a relocation but earns only $8,000 from it. The 50% cap is $4,000, so the 2026 deduction is $4,000. The unused $2,000 can be carried forward and deducted against income from the same relocation in the following year.
Edge cases
Relocations that straddle 2025 and 2026. The new limits apply to the 2026 and later taxation years. Expenses deducted on a 2025 return stay under the $4,000 and 150 km rules. Expenses deducted on the 2026 return use the new rules.
Several relocations in one year. The annual limit applies to the year as a whole, not to each job, so two out-of-town jobs in 2026 share one $10,000 limit.
The carryforward is narrow. Unused expenses carry forward only to the next year, and only against income from the same relocation. They do not carry forward indefinitely.
Owner-managers in the trades. If your corporation pays you a salary and you travel to its job sites, you are an employee and can qualify on the same terms. If your corporation reimburses your travel, you cannot deduct the same costs again. Pick one route and document it.
What employers and workers should do now
- Tell your crews. The worker claims the deduction, not the employer, so a short note before T4 season helps them claim it.
- Decide your reimbursement policy. Where the company already pays lodging or travel tax-free, the worker has nothing to deduct. Where it does not, a $10,000 deduction is now on the table. See our source deductions employer guide for how taxable and non-taxable allowances run through payroll.
- Keep the records. Workers need receipts for lodging, the round-trip travel and meal costs, the dates and addresses of the job sites, and proof of the distance between home, lodging and site.
- Check the distance at 120 km. Re-check jobs you ruled out under the 150 km test.
Key takeaways
- The labour mobility deduction 2026 limit is $10,000, up from $4,000. It is indexed to inflation from 2027.
- The distance rule is now 120 km, down from 150 km.
- It is law. Bill C-30 received Royal Assent on June 18, 2026.
- The 50% of relocation income cap and the 36-hour rule are unchanged.
- It is claimed on Form T777, line 22900, by the employed tradesperson, for construction work only.
RN Canada prepares personal and corporate tax returns and runs payroll for owner-managed businesses, from offices in Edmonton and Vancouver and remotely across Canada. If you want a 2026 labour mobility claim checked, or your crew travel policy reviewed before year-end, our tax return preparation and bookkeeping and payroll teams can help.