Budget 2026 at a Glance: What Ottawa’s $142B Plan Means for You

• $142.1B in new measures over five years (tax incentives, spending and other measures), on top of $9.4B announced since the spring update.
• 2026-27 deficit: $62.3B, about $3B lower than the $65.3B projected in the Spring Economic Update.
• Last year (2025-26) came in at $39.3B, $27.5B better than the spring estimate, largely on stronger-than-expected revenues.
• Deficits stay above $50B every year to 2030-31 ($52.9B); the budget sets no date to balance.
• Ottawa says the day-to-day operating budget moves into surplus in 2027-28; the remaining deficit funds capital investment (about $400B over six years).
• Federal debt reaches $1.59 trillion by 2030-31, with debt-to-GDP holding near 40%.
• Interest on the debt rises from $60.2B this year to $85.5B by 2030-31, and now exceeds the Canada Health Transfer ($57.4B).

• About $22B in new affordability measures over five years.
• 2027 Canada Groceries and Essentials Benefit Supplement: one-time payment in early 2027 to 12M+ low- and modest-income Canadians, equal to a 50% boost to their 2026-27 benefit (up to $339 for a single person; $679 for a couple with two children).
• Federal fuel excise tax suspension extended to the end of January 2027 (up to 10¢/L on gasoline, 4¢/L on diesel), 50% relief in February and March, full rates back April 1, 2027.
• Build Canada Workers Benefit from 2027: higher maximums ($1,859 single / $3,143 families) and a lower earnings threshold; advance payments phased out by 2028.
• Canada Caregiver Credit becomes fully refundable from 2027 (up to about $1,260 a year), so low-income caregivers benefit even with little tax owing.
• National Heat Pump Rebate: more than $2B over eight years for up to 820,000 households.

• Housing strategy of nearly $45B over 11 years, with a goal to end homelessness within a decade ($11.2B over four years starting 2027-28).
• Build Canada Homes gets another $13B over ten years, for $45B in total, targeting 200,000 homes.
• Mortgage insurance changes (effective Feb. 1, 2027): new 3- and 4-unit homes eligible at 90% loan-to-value with 30-year amortization; insured multi-unit loans (5 to 50 units) up to 50-year amortization on new construction.
• Existing first-time buyer GST relief (up to $50,000) continues.

• RRSP-for-life (proposed): Ottawa intends to merge the core features of the RRSP and RRIF into a single plan, so you would no longer have to convert your RRSP to a RRIF at age 71. Minimum annual withdrawals after 71 would still apply.
• Under consultation: a successor holder option, letting a surviving spouse or partner keep the RRSP open (as with a TFSA), and direct tax-free transfers to a qualifying survivor’s registered plan on death. Locked-in pension accounts may also need rule changes. Comments are due January 8, 2027; no effective date yet.
• Tax instalment threshold rises from $3,000 to $7,500, indexed and rounded to the nearest $500, for tax years starting on or after Jan. 1, 2028. Many retirees with RRIF, pension or investment income will no longer pay quarterly instalments.
• One May 15 deadline to file and pay for all individuals, including the self-employed and their spouses, starting with 2027 returns (replacing April 30 and June 15).
• Foreign property (T1135) reporting: the filing threshold doubles from $100,000 to $200,000, and simplified reporting is available up to $500,000 (from $250,000), for tax years ending after 2026.
• Old Age Security remains the single largest program: $89.4B this year, rising to $109.5B by 2030-31.

• Productivity Mega Deduction: permanent immediate expensing for eligible investments acquired on or after Sept. 15, 2026, covering about two-thirds of capital assets ($36.1B over five years).
• Canada’s tax rate on new business investment falls to 6.4%, less than half the U.S. rate.
• Canada Growth Incentive (CGI): a new exemption on up to $15M of capital gains per individual, per business, on qualifying shares of a Canadian-controlled private corporation issued on or after Budget Day and before 2037.
• CGI conditions: shares issued for cash or employment services to an adult Canadian resident; the corporate group’s assets no more than $100M at issuance; shares held at least 36 months; the business carried on primarily in Canada for at least 24 months after issuance.
• CGI exclusions: consulting and professional practices (accountants, lawyers, physicians, engineers, architects and others), businesses built on an individual’s reputation or skill, franchises, and the agriculture, fishing, forestry, mining, financial, insurance, utilities, real estate, food and accommodation, arts and entertainment sectors.
• Exempt CGI gains face a 30% inclusion rate under the Alternative Minimum Tax. Claiming the CGI on a company’s shares limits the Lifetime Capital Gains Exemption on the same company (and vice versa), but it can be combined with the Employee Ownership Trust exemption.
• Flow-through share credits extended: the 15% Mineral Exploration and 30% Critical Mineral Exploration tax credits run to March 31, 2032; antimony is added as a critical mineral.
• SR&ED expanded for commercialization ($930M over five years); Clean Technology and Clean Electricity tax credits extended to 2040.
• Consultation on corporate loss transfers within wholly owned corporate groups, so one company’s current-year losses could offset another’s income.

• Individual Pension Plans (IPPs) tightened: from Jan. 1, 2028, an IPP whose assets exceed 200% of its pension liabilities can lose its registration unless the excess is withdrawn after a CRA notice (at least 30 days).
• From Jan. 1, 2028, IPPs become subject to the same advantage, prohibited-investment and non-qualified-investment rules as RRSPs and TFSAs (a 50% tax on offending investments; 100% on advantages). From Jan. 1, 2027, plans of related members can no longer avoid IPP status by adding family members.
• Any registered pension plan revoked after 2026 faces a 10% special tax and is treated as a retirement compensation arrangement.
• Farm and fishing succession: the tax-deferred intergenerational rollover expands to nieces, nephews, grandnieces and grandnephews (yours or your spouse’s) for transfers on or after Jan. 1, 2027.
• Small business reinvestment rollover enhanced: sale proceeds can now be reinvested in another eligible small business over the year of sale plus three following years (with a reserve to defer the gain), and SAFE-style future-equity agreements can count.
• Simpler instalments: from 2028, individuals whose main income is business, professional or commission income may make one annual instalment of two-thirds of their tax by Dec. 31. Corporations owing $7,500 or less in federal tax skip instalments entirely, about 185,000 small corporations.
• CRA can report tax debts over $50,000 to credit bureaus once appeal rights are exhausted and after 30 days’ written notice.

• No changes to personal or corporate income tax rates.
• Canada Strong Fund: Canada’s first national sovereign wealth fund, seeded with $25B over three years, will invest alongside private investors in Canadian companies and nation-building projects, at arm’s length as a Crown corporation.
• Canada Strong Notes, a retail product targeted for early 2027 through participating financial institutions, are expected to offer principal protection at maturity, defined terms (for example 5, 7 or 10 years), a base coupon and a share of the Fund’s upside.
• Deposit insurance limit to rise to $250,000 (proposed), with no limit on eligible deposits held in registered and tax-free accounts, and temporary coverage for large balances after events like a home sale.
• Non-residents selling Canadian property: purchaser withholding drops from 25% to 15% (and from 50% to 30% for specified property).

• Child care: federal early learning and child care transfers of $10.3B this year, including a temporary $5.4B two-year top-up.
• RDSP: the temporary rule letting a parent, spouse or partner, or sibling open and hold an RDSP for an adult whose capacity is in doubt (set to end in 2026) becomes permanent.
• Benefit payments: small Canada Child Benefit amounts (under $50 a month) and Groceries and Essentials Benefit amounts (under $70 a quarter) will be paid as one lump sum from July 2027.
• More time to dispute a tax assessment: individuals and graduated rate estates get longer objection deadlines.
• Private foundations: the excess corporate holdings regime is eliminated from 2027.
• Trusts: tighter rules on tax-deferred distributions to non-resident beneficiaries, effective Budget Day.

• Medical Expense Tax Credit: fewer prescriptions needed for certain eligible expenses, starting with your 2026 return.
• Massage therapy by qualifying therapists becomes HST-exempt for services after Budget Day, saving Ontario clients the full 13%.
• Optional flat amounts from 2027, so fewer receipts: moving expenses ($1,000), home accessibility ($1,000 one-time), adoption ($1,200), plus the clergy residence and tradespeople’s labour mobility deductions.
• Commission employees can claim both car/travel costs and other employment expenses from 2027; employed artists’ $1,000 cap is replaced by a limit equal to their artistic employment income.
• Students: employer or other arm’s-length funding no longer blocks the scholarship and bursary exemption (2027).
• Volunteers: a single 14% credit on $6,000 for firefighters and search-and-rescue volunteers, with hours from both counting toward the 200-hour minimum (2027).
• Northern Ontario residents in prescribed zones: the residency deduction loses its 20%-of-income cap and the board-and-lodging reduction; the travel deduction is simplified (2027). Apprentice mechanics deduct all eligible tool costs under one deduction.

• Core defence spending grows from $75.1B in 2026-27 to $99.2B by 2030-31 (cash basis), on a path toward NATO commitments.
• Build Communities Strong Fund: $51B over ten years for local infrastructure.
• Major projects: about $194B of investment referred to the Major Projects Office, with a goal of one decision within one year per project.
• Indigenous reconciliation: $26.6B in new funding, much of it for water infrastructure, housing, education and children and families.
• Resources and industry: $6.5B for the forest sector and expanded critical-minerals support.

How the budget was received

• Government: Minister Champagne says the plan targets the strongest economy in the G7, a more affordable life and stronger sovereignty, and that debt charges remain low by historical standards.
• Economists: Queen’s University economist Don Drummond notes the government is highly indebted and today’s support is borrowed money that must eventually be repaid. UBC’s Paul Kershaw says support is strong for seniors but modest for younger generations.
• Opposition: Conservative Leader Pierre Poilievre called it a “costly credit card budget” and said his party will vote against it. The NDP says it favours large corporations; the Greens say it sidelines climate targets.
• Next steps: most tax measures are proposals until Parliament passes the implementing legislation.