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Canada: Tax measures in 2026 budget (Ontario)

Ontario budget reduces small business tax rate and adjusts HST rebate for new homes.

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march 27, 2026

Ontario's Finance Minister on March 26, 2026, delivered the province’s 2026 budget, with tax proposals including a decrease in Ontario’s small business income tax rate to 2.2% (from 3.2%) effective July 1, 2026, and, consequently, an increase in the non-eligible dividend tax rate (effective January 1, 2027).

Although the budget introduces a temporary one-year enhancement of the current rebate related to the provincial portion of the harmonized sales tax (HST) for buyers of new houses and condos, the budget also announces that Ontario will eliminate the current provincial portion of the HST rebate for new homes when the temporary enhanced rebate ends.

Following the budget release, Ontario introduced Bill 97, which includes many of the budget measures.

Read a March 2026 report prepared by the KPMG member firm in Canada

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