Up to $10,000 back: the Labour Mobility Deduction just doubled for Canadian tradespeople

If you traveled for work as a tradesperson in 2026, you may be sitting on a $10,000 tax deduction most people in the trades do not know exists.

The Labour Mobility Deduction was created in 2022 to let tradespeople deduct temporary relocation expenses when traveling for work. The original cap was $4,000 per year. The Spring Economic Update 2026 raised it to $10,000.

This is real money. Here is exactly what changed and how to claim it.

What changed in 2026

Three things, effective for the 2026 tax year:

1. Cap raised from $4,000 to $10,000. Same eligible expense categories (lodging, travel, meals). Much higher ceiling.

2. Distance threshold dropped from 150 km to 120 km. Your temporary lodging now only needs to be 120 km closer to your work site than your normal residence. Used to be 150.

3. Annual indexation. The cap will increase with inflation each year going forward, so the deduction will keep pace.

Who qualifies

You must be:

• An eligible tradesperson or registered apprentice in the construction industry
• Earning employment income at a temporary work site
• Taking up temporary lodging that is at least 120 km closer to the work site than your normal home

The deduction caps at 50% of your employment income from that specific relocation.

Who this hits hardest, in a good way

In my 8 years working with Canadian trade businesses, I have seen this deduction almost universally underused. The people who should be claiming it most:

• Alberta tradespeople doing camp work in the oil sands. Most of these workers easily spend $7,000-$15,000 a year on lodging and travel. Under the old rules, $4,000 was the max claim. Now they can claim the full amount up to $10,000.
• B.C. ironworkers and electricians on major infrastructure projects. Site C, LNG Canada, the various port and highway projects. All involve significant temporary relocation.
• Ontario carpenters on remote new-build sites. Same pattern.
• Anyone routinely traveling 2+ hours to work sites for stretches of time long enough to take temporary lodging.

If you spent $7,000 on temporary lodging in 2026, the old rules let you deduct $4,000. The new rules let you deduct the full $7,000. That is a $3,000 difference in your taxable income, which translates to roughly $750-$1,200 in actual tax savings depending on your bracket.

What to do at tax time

Keep clean records throughout the year:

• Receipts for every dollar of lodging, travel, and meals tied to temporary work locations
• A log of work sites visited and dates
• The distance from your normal residence to each work site (Google Maps drive time works)
• Your employment income broken out by which work site it came from

When you file your T1, the deduction goes on line 22900. Most tax software prompts you through it if you indicate you are a tradesperson. If your situation is complex (multiple work sites, multi-province, partial-year relocations), talk to an accountant. The $300-$500 you spend on professional tax prep pays for itself.

One thing to watch

The deduction is for temporary relocations. If you permanently move closer to your work site, it does not qualify. The CRA has audited this in the past. Make sure your records clearly show the relocation was temporary, with a return to your primary residence between contracts.

Why this matters beyond the dollars

The Labour Mobility Deduction is one of the few tax measures specifically designed for tradespeople. It exists because the federal government recognized that the construction labour shortage requires workers to travel, and traveling costs money. Use the deduction. The shops and workers that use it have more take-home pay. The ones who do not are leaving money on the table.

This is part of a larger pattern of federal investment in trades, including Team Canada Strong and the $16,000-per-apprentice funding announced in the same update.

Two weeks of camp lodging costs more than the difference between claiming this deduction and not.

Sources: Spring Economic Update 2026, Tax Measures Supplementary Information. Canada.ca Labour Mobility Deduction guidance.