Stay informed as Canada’s provinces and territories unveil their 2026 budgets. RSM Canada's tax team explores the key tax, economic and industry considerations proposed in these budgets—and highlights what they could mean for businesses and individuals.
Read our commentary on four provincial budgets—Alberta, British Columbia, Quebec and Ontario—as they are released.
Consumer products key takeaway
Alberta introduces a new 6 per cent vehicle rental tax beginning in 2027 to generate additional revenue amid economic challenges.
Technology key takeaway
A new data centre levy links taxes to actual power usage to encourage large operators to invest in their own power sources while remaining fully tax-deductible.
Real estate key takeaway
Alberta’s budget predicts a downturn in new housing construction, but an increase to its tourism levy on short-term accommodations could lead to conversions of residential rental units into housing inventory.
Alberta’s provincial government did not propose any income tax increases or cuts to its tax programs in its 2026 budget and fiscal plan (Alberta Budget 2026) amid ongoing economic pressures.
The budget, delivered by provincial Finance Minister Nate Horner on Feb. 26, 2026, included a deficit that was higher than previously projected by the provincial government. Alberta Budget 2026 also featured new tax measures—including a caregiver credit and the vehicle rental tax—and increased the province’s tourism levy rate on short-term accommodations.
New caregiver credit
Alberta Budget 2026 proposed consolidating the province’s existing caregiver-related credits—the caregiver credit and infirm dependent credit—into a single credit starting in 2027.
The new Alberta Caregiver Credit will be available to Albertans caring for eligible dependent adult relatives who rely on a caregiver because of a mental or physical infirmity. Unlike the current credits, the new credit will be available to caregivers caring for an infirm spouse; this eligibility will align with the federal Canada Caregiver Credit.
The new credit will follow the structure of the current caregiver credit, which grants caregivers a non-refundable tax credit.
The full credit is available if the dependent's net income is below $20,956; a partial credit is available if the dependent's net income does not exceed $34,136. Caregivers who are currently able to claim the full credit for 2026 will receive a tax savings of $1,054.
These amounts will be adjusted for inflation by the Alberta escalator for the 2027 taxation years and beyond.
While some provinces—like British Columbia—paused indexing for inflation, Alberta’s budget indicated amounts will increase per the Alberta escalator framework introduced in 2024. As a result, certain tax credit amounts and thresholds will rise by 2 per cent in 2026 to reflect inflation.
This includes an increase in:
Amendments to the Alberta Corporate Tax Act in late 2025 implemented a new levy framework for data centres so the province could earn revenue from these large-scale sites.
The levy is based on the value of computing equipment and is fully deductible for corporate income tax purposes. Levy rates range from zero per cent to a maximum of 2 per cent, with lower rates available for data centres that use their own power solutions.
Alberta Budget 2026 clarified that rates are calculated based on actual power consumption and that power not drawn from the broader grid will be eligible for a zero per cent rate.
Alberta’s provincial government proposed implementing a new vehicle rental tax to create a stable source of revenue from visitors to support provincial services.
The tax, set to take effect Jan. 1, 2027, will apply to short-term rentals of passenger vehicles designed primarily to transport eight or fewer people. Long-term leases and non-passenger vehicles, such as cargo vans, moving trucks and similar types of vehicles, will be exempt.
The tax rate will be set at 6 per cent of the rental price, excluding the federal goods and services tax (GST). Itemized charges for insurance and fuel will not be subject to the new tax as these are covered by existing provincial taxes.
Additional details are expected when legislation is introduced in fall 2026.
The government will increase the tourism levy rate from 4 per cent to 6 per cent starting April 1, 2026.
The levy applies to the price of short-term accommodations operating in Alberta, including hotels, motels and inns. Revenue from this predictable source is meant to help fund provincial government programs and services, including support for development of Alberta’s tourism sector.
Industrials key takeaway
B.C. proposed aligning measures related to mining and scientific research—including eligible expenditures —with federal changes and administration.
Life sciences key takeaway
To support its life sciences sector, B.C.’s government will explore a patent box regime to provide tax incentives on income earned from intellectual property.
Real estate key takeaway
Measures to increase the housing supply in B.C. include an increase to the speculation and vacancy tax rate and expanded exemptions for purpose-built rentals.
British Columbia’s 2026 budget and fiscal plan (B.C. Budget 2026) proposed measures intended to limit spending and raise revenue after the government projected a provincial record-breaking deficit.
The budget, delivered by provincial Finance Minister Brenda Bailey, expanded on previously announced measures as the province confronts stagnant economic growth and high cost of living. Its proposals also align with those from the 2025 federal budget that encourage innovation, advancement in life sciences and industrial development.
B.C.’s government will increase the personal income tax rate applicable to the lowest tax bracket from 5.06 per cent to 5.60 per cent, effective for the 2026 taxation year and beyond. This increase will apply to the first $50,363 of taxable income and will first appear on pay cheques after July 1, 2026 when payroll withholding is updated.
The province also outlined its proposal to raise the basic personal income tax credit rate from 5.06 per cent to 5.60 per cent. This adjustment will partially offset the effects of the personal income tax rate increase by enhancing basic non‑refundable income tax credits. This change is effective for 2026 and beyond.
Although typically indexed to inflation, B.C. Budget 2026 proposed freezing personal income tax brackets and non-refundable tax credits—such as basic personal amount, age amount and disability amount—at 2026 values for the 2027 to 2030 taxation years. Indexation will resume in 2031.
These anticipated changes will result in modest tax increases for most individuals with an average additional tax bill of $76 in 2026. Despite this, B.C. is still expected to have the lowest income tax rate among all provinces for individuals earning less than $149,000 a year.
The B.C. tax reduction credit is a non-refundable credit for low-income individuals. The full credit amount is available to taxpayers earning less than $25,570 for 2026 and is reduced at a rate of 3.56 per cent for income above this threshold.
To further offset the changes to B.C.’s lowest personal income tax rate, the budget proposed increasing the maximum tax reduction credit by $115 to $690, effective for the 2026 taxation year.
The budget also proposed pausing indexation for 2027 through 2030.
The budget proposed a new income-tested children and youth disability supplement under B.C.’s family benefit program.
This supplement would provide up to $6,000 annually per eligible dependent; eligibility would be based on a family’s entitlement to the federal disability tax credit.
If approved, the additional payment would be delivered monthly alongside the province’s existing family benefit starting July 1, 2027.
B.C. Budget 2026 introduced a temporary refundable investment tax credit for Canadian-controlled private corporations that make eligible investments in buildings, machinery and equipment used for manufacturing and processing in the province—subject to certain exclusions.
The credit is 15 per cent of eligible investments up to $2 million for a maximum credit of $300,000.
This incentive is available for eligible investments made on or after April 1, 2026 and before April 1, 2031, after which the rate will reduce by 2.5 percentage points every year until it is fully phased out for investments made after March 31, 2036.
The 2026 budget amended B.C.’s scientific research and experimental development (SR&ED) tax credit to align with recent changes to the federal SR&ED program changes announced in the 2024 fall economic statement and the 2025 federal budget. These amendments are effective for taxation years that began on or after Dec.16, 2024.
This tax credit is intended to encourage corporations to invest in research and development that supports innovation, productivity and long-term growth in the province.
The amendments will:
The budget also expanded access to the refundable SR&ED tax credit to eligible Canadian public corporations with the goal of supporting small- and medium-sized businesses as they scale.
In an effort to offer a greater degree of certainty for businesses making longer-term R&D investments in B.C., the budget removed the SR&ED tax credit’s previous sunset date of Aug. 31, 2027.
B.C. Budget 2026 indicated that the provincial government will explore the possibility of adopting a patent box regime for the life sciences sector to encourage innovation.
A patent box regime would provide a tax incentive on income derived from qualifying intellectual property. This could lower taxes on profits generated from R&D developed and patented in the province.
The province intends to consult with stakeholders and the federal government to assess whether such a regime could accelerate commercialization and support growth in B.C.’s life sciences industry—including research firms, testing and medical laboratories, and manufacturers of medical devices, diagnostics, pharmaceuticals, radiopharmaceuticals and related products.
B.C.’s 2026 budget included a clarification regarding its mining exploration tax credit.
Regarding this incentive, expenses incurred for the purposes of determining the quality of a mineral resource in Canada do not include costs related to assessing the resource’s economic viability or engineering feasibility, effective Nov. 4, 2025.
This aligns the provincial tax credit with changes to its federal counterpart announced in the 2025 federal budget.
B.C. Budget 2026 proposed the following amendments aimed at streamlining and updating certain industry incentives:
B.C. will implement significant changes to its provincial sales tax (PST) effective Oct. 1, 2026, including expanding the tax base and removing several long‑standing exemptions.
Professional services expansion
PST will now apply to several professional services that were previously non-taxable. These include accounting and bookkeeping services, architectural, engineering and geoscience services, rental property and strata management services, commissions on non‑residential real estate transactions, and security and private investigation services.
PST on architectural, engineering and geoscience services will apply to 30 per cent of the purchase price of the services subject to the tax.
These changes bring B.C.’s framework in line with how similar services are taxed in provinces like Manitoba and Saskatchewan.
Businesses providing these services must register to collect and remit PST and ensure invoicing, contracts and systems are updated. Purchasers should anticipate higher non‑recoverable tax costs and consider the effects on project budgets and service procurement.
Elimination of consumer exemptions
B.C. will also eliminate PST exemptions for clothing patterns, yarn, natural fibres, synthetic thread and fabric used to make or repair clothing. Exemptions for clothing and footwear repair services will also be removed, but basic laundry services will remain exempt.
These changes remove exemptions for goods and services that were once considered essential but are no longer widely used.
The province will also remove PST exemptions for basic cable television, toll‑free telephone services and residential landline services to align the tax treatment of traditional communication services with digital and streaming alternatives. Retailers and service providers will need to update point‑of‑sale and billing systems, while consumers should expect PST to apply to goods and services that were previously exempt.
B.C. Budget 2026 expanded the property transfer tax exemption for purpose‑built rental buildings, effective Jan. 1, 2025, by allowing units to be leased for up to 24 months before the first taxable transaction without losing eligibility. Previously, leasing units prior to sale could disqualify a project from exemption.
Qualifying purchases will still benefit from exemptions to both the additional 2 per cent property transfer tax on the residential portion above $3 million and the general property transfer tax for transactions occurring between Jan.1, 2025, and Dec. 31, 2030.
To qualify, properties must be newly built, non‑stratified, used entirely for long‑term rental for at least 10 years and contain a minimum of four rental units.
The province’s speculation and vacancy tax rate for foreign owners, untaxed worldwide earners and others will increase from 3 per cent to 4 per cent starting Jan. 1, 2027. The higher rate applies to declarations based on property use in the 2027 calendar year and later, with no effect on 2026 filings.
Real estate key takeaway
Ontario proposed a rebate on the provincial portion of the HST for new homes to address affordability and increase housing supply.
Consumer products key takeaway
The province announced a tax cut for small businesses to improve cash flow and enable investments in production, marketing and expansion to drive consumer product sales.
Industrials key takeaway
Ontario proposed aligning measures related to accelerating the tax depreciation of assets with their federal counterparts to lower costs for capital-intensive businesses.
Ontario announced a significant tax cut for small businesses in its 2026 budget and fiscal plan (Ontario Budget 2026) as the province grapples with ongoing economic uncertainty. The budget also proposed new and enhanced measures intended to accelerate capital investments and make housing more affordable.
The provincial record-breaking $244.2 billion budget, presented by Finance Minister Peter Bethlenfalvy on March 26, 2026, introduced a new account investment fund to create jobs, enhance competitiveness and support sustainable growth. The budget projected a deficit of $13.8 billion for the next year.
Ontario Budget 2026 lowered the provincial small business corporate income tax rate from 3.2 per cent to 2.2 per cent, effective July 1, 2026. This will be prorated for taxation years that straddle the effective date.
The reduced rate applies to Canadian-controlled private corporations (CCPCs) and is available for up to $500,000 of active business income.
Aligning with this reduction, Ontario’s budget also proposed reducing the dividend tax credit rate for non-eligible dividends from 2.9863 per cent to 1.9863 per cent, effective Jan. 1, 2027.
Ontario Budget 2026 introduced a series of corporate tax measures aimed at accelerating capital cost recovery and reducing the after-tax cost of investment.
These proposals, which align with initiatives announced in the 2025 federal budget, include:
Immediate 100 per cent write-offs
This is available for:
Accelerated depreciation and enhanced deductions
These are available for:
These measures would take effect following the passage of federal legislation for corresponding measures.
Ontario’s government announced plans to end the Regional Opportunities Investment Tax Credit on Jan. 1, 2027.
The credit, which supports businesses investing in regions with slower job growth, will be phased out as provincial officials say those areas have improved economically.
As a transition, eligible expenditures incurred before Dec. 31, 2026 will remain eligible for the credit.
Funded benefit plans can elect to be treated as unfunded plans beginning April 1, 2026 as part of new flexibility under Ontario’s Corporations Tax Act.
This election would defer insurance premium tax liability from when contributions are paid into the plan to when benefits are paid.
Ontario Budget 2026 proposed temporarily enhancing the province’s HST New Housing Rebate and the New Residential Rental Property Rebate to fully remove the 8 per cent provincial portion of HST on qualifying new homes valued up to $1 million.
Under current rules, the provincial rebate is equal to 75 per cent of the provincial portion of HST—capped at $24,000. The proposed enhancement would increase the maximum rebate to $80,000.
The enhanced rebate would apply in full to new homes valued at $1 million or less and would be maintained for homes valued up to $1.5 million—with a linear phase-out for homes valued between $1.5 million and $1.85 million. For homes valued at $1.85 million or more, the rebate would revert to the current maximum of $24,000.
Those looking to qualify for the rebate, which is not limited to first-time buyers, must meet the following criteria:
The Ontario government proposed aligning its first-time home buyer HST rebate with the federal framework to enable combined relief.
This builds on a 2025 federal measure that provides a 100 per cent rebate of the 5 per cent goods and services tax (GST) on homes valued up to $1 million—capped at $50,000—with a phase-out up to $1.5 million.
Ontario’s rebate, first announced on Oct. 28, 2025, would be amended to rebate the 8 per cent provincial portion of the HST. This could result in combined savings of up to $130,000.
To be eligible, purchasers should qualify as first-time home buyers and acquire a new or substantially renovated home for use as their primary residence.
The federal rebate applies to agreements entered into on or after March 20, 2025 and before 2031; Ontario intends to align its program with this period, subject to federal approval.
Real estate key takeaway
Quebec proposed immediate expensing for the costs of greenhouses—in alignment with federal measures—and pledged to target tax non-compliance in residential construction.
Media key takeaway
The provincial budget proposed enhancements and extensions to existing film and media credits to better address current challenges in the industry.
Quebec’s 2026 budget plan (Quebec Budget 2026) focused on affordability and infrastructure amid geopolitical tensions, rising living costs and a volatile trade environment.
Delivered by provincial Finance Minister Eric Girard on March 18, 2026, key measures include five media credits, immediate expensing for greenhouse buildings and enhanced enforcement to address tax evasion in the construction industry.
With a relatively modest slate of measures as part of the provincial government's goal of restoring fiscal balance, Quebec's budget predicted the province’s deficit will continue to decrease from its current $9.9 billion mark.
Quebec Budget 2026 proposed immediate expensing for greenhouses with the intent of increasing supply and encouraging investment in food production in the province.
This measure—which aligns with a related federal initiative announced in January—will allow greenhouse businesses to fully deduct the total cost of investment in the first year of acquisition for greenhouses acquired on or after Nov. 4, 2025 and for those that become available for use before 2030.
Quebec’s amendments will take effect once the corresponding federal legislation is enacted and will apply on the same dates as the federal measure.
The province announced plans to strengthen enforcement and compliance efforts to more effectively combat tax evasion and unreported work in the construction sector, with a particular focus on residential construction.
Revenu Quebec (RQ) and other provincial construction committee partners will implement the following measures to improve tax compliance, including:
Quebec Budget 2026 proposed amending the province’s tax credit for the development of e-businesses integrating artificial intelligence (TCEBAI) to improve predictability and support its effective implementation.
The credit has refundable and non-refundable rates; for taxation years beginning in 2026, the refundable credit rate is 22 per cent and the non‑refundable rate is 8 per cent. Reduced rates apply where at least 50 per cent of a corporation’s gross revenue from certain activities is attributable to intercompany outsourcing services.
Key amendments include:
Quebec currently offers a refundable tax credit for eligible corporations to modernize their information systems and technology infrastructure to transition print media to digital platforms.
The credit, calculated at 35 per cent of eligible costs up to $7 million per year, applies to qualified wages and expenditures incurred before Jan. 1, 2026 and on expenditures relating to the acquisition of qualified property acquired before Jan. 1, 2025.
The credit was originally set to end on Dec. 31, 2025. However, the new provincial budget proposed gradually phasing down the credit to 20 per cent for eligible digital conversion costs incurred after Dec. 31, 2026 and before Jan. 1, 2028—and 10 per cent for eligible digital conversion costs incurred after Dec. 31, 2027 and before Jan. 1, 2029.
The current refundable tax credit applies to labour expenditures of a corporation related to eligible productions from scripting to post-production.
Base rates range from 32 per cent to 40 per cent, with potential increases for public financial assistance, computer-aided effects and regional productions. Labour expenditures considered for the credit may not exceed 65 per cent of total production costs.
Key amendments announced in Quebec Budget 2026 include:
These changes were introduced to address contemporary challenges in the media industry. They would applies to productions for which an application for an advance ruling or certificate is filed with Société de développement des entreprises culturelles (SODEC) after March 18, 2026.
Quebec’s new budget proposed amending its refundable film dubbing tax credit so documentaries and television magazine programs are no longer subject to minimum length or episode requirements—provided other conditions are met.
These amendments would apply to qualified productions for which a certificate application is submitted to SODEC after March 18, 2026 confirming that the dubbed version is a qualified production.
The credit is equal to 35 per cent of a corporation’s qualified film dubbing expenditures.
The print media refundable tax credit provides a credit of 35 per cent of qualified wages, up to an annual limit of $75,000 per eligible employee, for a maximum credit of $26,250 per employee provided eligibility criteria is met.
Quebec’s budget proposed several amendments to expand and modernize the credit as the sector contends with ongoing challenges. Key changes include:
The amendments would apply to taxation years or fiscal periods ending after March 18, 2026—with an option for corporations or partnerships to elect out for earlier periods by filing within 15 months of year-end.
Quebec tax authorities use the province’s mandatory disclosure and preventive disclosure mechanisms for certain transactions to identify risks of non-compliance with the purpose and spirit of tax legislation.
Quebec Budget 2026 proposed amending the process of submitting information returns in response to a significant increase in the number of disclosures. These changes include:
These measures would apply to transactions or series of transactions that begin on or after March 18, 2026.
Similar to a measure announced in the 2025 federal budget, Quebec Budget 2026 proposed providing RQ the authority to file qualifying income tax returns for low-income individuals residing in the province.
The automatic tax filing process would begin in the spring of 2027 for the 2026 taxation year end—provided the legislation is adopted.
Quebec’s budget proposed amendments to the province’s voluntary retirement saving plan, including:
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