2025 Ontario Budget: Key Takeaways for Private Businesses

Strategic Insights -

The 2025 Ontario budget, unveiled on May 15, 2025, under the theme "A Plan to Protect Ontario," focuses on cost reduction, strategic investment, and economic resilience in the face of global trade uncertainty. While it does not introduce new taxes or incentives, the budget provides essential information for private business owners to navigate the changing landscape.

Key Takeaways:

  • The general corporate tax rate in Ontario remains at 11.5%, while the small business rate is 3.2% on the first $500,000 of active business income.
  • Tax deferral measures allow eligible businesses to defer payments for select provincially administered taxes from April 1 to October 1, 2025, without interest or penalties.
  • The Ontario Made Manufacturing Investment Tax Credit (OMMITC) is enhanced to 15% for eligible capital investments up to $20 million per year, available to non-Canadian controlled private corporations with a permanent Ontario presence.
  • The credit applies to machinery, equipment, and buildings acquired between May 15, 2025, and December 31, 2029.
  • Recapture provisions apply if assets are sold or moved out of province within five years.
  • Tax credit updates for businesses include a 15% credit rate for eligible capital investments, now available to non-CCPCs with Ontario operations.
  • The Protecting Ontario Account, a $5 billion fund, aims to provide emergency liquidity relief to businesses facing tariff-related disruptions.
  • WSIB premium rate reductions and rebates will return $4 billion in surplus WSIB funds to safe employers, lowering the average premium rate to $1.25 per $100 of insurable payroll.
  • Fuel tax cuts of 9 cents/litre on gasoline and diesel are now permanent, and propane used in licensed road vehicles will be tax-exempt starting July 1, 2025.
  • Alcohol tax and markup reductions take effect August 1, 2025, slashing rates on spirits, beer, cider, and ready-to-drink beverages sold by microbrewers and the LCBO.
  • The budget supports small businesses through tax deferrals, lower fuel and energy costs, enhanced tax credits for capital investment, and permanent fuel tax reductions.

Statistics:

  • Ontario's general corporate tax rate remains at 11.5%.
  • The small business tax rate is 3.2% on the first $500,000 of active business income.
  • $4 billion in surplus WSIB funds will be returned to safe employers in 2025.
  • The average WSIB premium rate for Ontario businesses will be $1.25 per $100 of insurable payroll in 2025.
  • Fuel tax cuts of 9 cents/litre on gasoline and diesel are now permanent.
  • Propane used in licensed road vehicles will be tax-exempt starting July 1, 2025.
  • The Protecting Ontario Account is a $5 billion fund established to provide emergency liquidity relief to businesses facing tariff-related disruptions.

Sources:

  • 2025 Ontario Budget, released on May 15, 2025
  • Bateman MacKay LLP, a law firm providing business advice and guidance