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Budgets

Provincial Tax Proposals: Key Changes and Implications

Strategic Insights

— 2 min read

British Columbia has raised its annual housing speculation and vacancy tax to 3 per cent from 2 per cent on foreigners and untaxed worldwide earners, and to 1 per cent from 0.5 per cent for most Canadians, effective in 2026. Meanwhile, Alberta has introduced a new low tax bracket for income up to $60,000 with a provincial tax rate of 8 per cent for 2025. Additionally, Manitoba will no longer index its income tax thresholds and basic personal amount to inflation, starting with the 2025 taxation year. Nova Scotia has lowered its small business tax rate to 1.5 per cent and raised the small business deduction limit to $700,000, making it the highest limit in the country.

Key Takeaways:

  • British Columbia's housing speculation and vacancy tax has been increased to 3 per cent from 2 per cent on foreigners and untaxed worldwide earners, and to 1 per cent from 0.5 per cent for most Canadians, effective in 2026.
  • Alberta has introduced a new low tax bracket for income up to $60,000 with a provincial tax rate of 8 per cent for 2025, with a threshold indexed to inflation starting in 2026.
  • Manitoba will no longer index its income tax thresholds and basic personal amount to inflation, starting with the 2025 taxation year, resulting in a projected $40-million savings in 2025-26.
  • Nova Scotia has lowered its small business tax rate to 1.5 per cent and raised the small business deduction limit to $700,000, making it the highest limit in the country.
  • Prince Edward Island is raising its small business tax threshold to $600,000 from $500,000 and lowering its general corporate tax rate to 15 per cent from 16 per cent, both effective July 1.
  • Ontario is introducing a new refundable tax credit for fertility treatment, providing 25 per cent of eligible expenses up to $20,000, effective January 1, 2025.
  • Quebec is abolishing several tax measures deemed inefficient or little-used after a review of provincial tax expenditures.

Statistics:

  • Alberta's new low tax bracket for income up to $60,000 has a provincial tax rate of 8 per cent for 2025.
  • The small business deduction limit in Nova Scotia has been increased to $700,000, effective on April 1.
  • Manitoba is expected to save $40-million in 2025-26 by freezing its income tax thresholds and basic personal amount to inflation.
  • Ontario's refundable fertility treatment tax credit provides up to $5,000 per year, effective January 1, 2025.
  • Quebec's abolished tax measures include a tax credit for cultural patronage, a deduction for income-averaging annuities for artists, and a tax "holiday" for Quebec sailors assigned to international goods transport.

Sources:

  • Globe and Mail
  • British Columbia's budget bill
  • Alberta's budget document
  • Manitoba's budget document
  • Nova Scotia's budget document
  • Prince Edward Island's budget document
  • Ontario's budget document
  • Quebec's budget document

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