Tax Highlights from the 2026 Québec Budget

Minister of Finance Eric Girard tabled the 2026/27 Québec provincial budget on March 18, 2026.

The budget projects a deficit of $6.3 billion for the 2026/27 fiscal year, declining to $4.0 billion in 2027/28, with a plan to restore fiscal balance by 2029/30. The financial framework includes a contingency reserve of $2 billion for the 2026/27 fiscal year, decreasing to $1.5 billion over the following four fiscal years to cover unforeseen expenditures or mitigate the effects of slower--than-anticipated economic growth. The forecast deficit for the nearly completed 2025/2026 fiscal year now stands at $7.7 billion – $3.7 billion below the initial projected deficit of $11.4 billion. Real GDP growth is expected to reach 1.1% in 2026 and 1.4% in 2027.

On the income tax front, there are no changes to personal or corporate income tax rates for 2026. However, the budget introduces an automated income tax return filing for certain low-income individuals. It also includes amendments to the refundable tax credit to support print media, the extension and phase-out of the refundable tax credit for the digital transformation of print media, amendments to the refundable tax credit for Québec film or television productions, and adjustments to tax credits for the development of e-business incorporating artificial intelligence functionalities.

The following pages summarize the changes announced in the budget. Please note that these changes are proposals until they are passed into law by the government.

PERSONAL TAX MATTERS

Personal Income Tax Rates and Tax Brackets

There are no proposed changes to personal income tax rates. However, tax brackets and other amounts have been indexed by 2.05% to account for inflation. The table below outlines Québec’s tax rates and tax brackets for 2026.

The table below outlines the 2026 combined federal and provincial highest marginal tax rates for various types of income.

Automated income tax filing for low-income individuals

To ensure Québec residents receive tax assistance to which they are entitled but may not claim due to not filing a Québec income tax return, it is proposed that Revenu Québec be authorized to file income tax returns on behalf of certain individuals, selected based on specific criteria.¹

To qualify for an automated income tax return filing by Revenu Québec for a given taxation year, an individual must meet the following conditions:

• The individual must reside in Québec as of December 31 of the taxation year.
• The individual must not have filed an income tax return for that year before the applicable filing due date or within a specified period thereafter (to be determined).

Additional selection criteria for eligible individuals, namely those with simple and stable tax situations, will be determined by spring 2027.

This measure will apply as of the 2026 taxation year, provided that the legislation has been enacted.

CORPORATE TAX MATTERS

Corporate Income Tax Rates

There are no proposed changes to corporate income tax rates. The table below outlines Québec’s tax rates and small business limit for 2026.

The table below outlines the 2026 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).

Amendments to the refundable tax credit to support print media

It appears that news agencies and media outlets broadcasting news programs on radio or television are now facing challenges similar to those experienced by print media when the refundable tax credit to support print media was introduced. To better support the production and dissemination of high-quality public interest information throughout Québec, amendments will be made to this refundable tax credit.

These changes include:

• Expanding eligibility criteria to include news agencies and media outlets broadcasting news programs on radio and television.
• Increasing the annual limit applicable to the qualified wages of an eligible employee from $75,000 to $85,000, allowing the refundable tax credit to reach up to $29,750 per eligible employee annually.
• Removing information technology activities from the list of eligible activities for the purposes of the employee certificate.

These amendments will apply to taxation years or fiscal periods ending after March 18, 2026. However, a corporation or partnership may elect, by filing a written notice with Investissement Québec within the prescribed time limits, for the amendments not to apply to a taxation year or fiscal period beginning before March 18, 2026.

In addition, as of the effective date of these amendments, the refundable tax credit will be renamed the “refundable tax credit to support Québec news media.”

Amendments to the digital transformation of print media tax credit

A qualified corporation that incurs eligible digital conversion costs may benefit from the refundable tax credit for the digital transformation of print media. This credit is calculated at a rate of 35%, and a corporation may receive up to $7 million per taxation year.

In general, eligible digital conversion costs for a qualified corporation include the total of “qualified wages” incurred in the year in respect of eligible employees related to eligible digital conversion activities, as well as all “qualified expenditures” for that year associated with an eligible digital conversion contract.

For a given taxation year, “qualified expenditures” and “qualified wages” refer only to costs and wages incurred during all or part of the year that falls within the eligibility period for this refundable tax credit, which ran from March 28, 2018, to December 31, 2025.

To provide print media businesses with a transition period to complete their digital transformation projects and enhance predictability, the eligibility period for the refundable tax credit will be extended to December 31, 2028. To qualify, property must be acquired before January 1, 2028.

The legislation will also be amended to gradually reduce the credit rate to 20% for eligible digital conversion costs incurred after December 31, 2026, and before January 1, 2028, and to 10% for costs incurred after December 31, 2027, and before January 1, 2029.

Amendments to the refundable tax credit for Québec film or television productions

The refundable tax credit for Québec film or television productions is calculated based on the labour expenditures incurred by a corporation in respect of a property that qualifies as a Québec film production. The base rate of the credit is generally 32%, but may reach 40% for certain specified productions.

To better reflect the current industry conditions, the following changes will be made:

• Adding funding from the Indigenous Screen Office to the list of excluded assistance amounts for the purposes of the tax credit.
• Modifying the eligibility criteria so that documentaries and audiovisual magazine programs are no longer subject to requirements related to program length, independent segments of comparable length, or number of episodes in order to qualify as eligible classes of films.

Consequential amendments will also be made to the tax credit for film dubbing and the film production services tax credit with respect to eligible classes of films.

These amendments will apply to a film or television production for which an application for an advance ruling – or, where no advance ruling has been filed, an application for a certificate – is submitted to SODEC after March 18, 2026.

Adjustments to tax credits for e-business integrating artificial intelligence functionalitiesx

In the 2025/26 budget, Québec’s tax assistance for the development of e-business was modernized to focus on higher value-added activities, specifically those primarily related to integrating artificial intelligence (AI) functionalities into e-business. The tax assistance consists of a refundable tax credit and a non-refundable tax credit for the development of e-business integrating artificial intelligence functionalities (hereinafter referred to as “TCEB^AI”).

It has been determined that certain adjustments are required to provide greater predictability for companies benefiting from the TCEB^AI, while ensuring the effective implementation of the measure. These adjustments include:

• Relaxing certain criteria related to eligible activities for the purposes of the employee certificate to clarify that certain preparatory work qualifies under the TCEB^AI. These amendments will apply to taxation years beginning after December 31, 2025. They will also apply to taxation years that began after March 25, 2025, but before January 1, 2026, where the corporation has filed an election with Investissement Québec for the amendments introduced in the 2025/26 budget to apply to that taxation year.
• Relaxing the conditions related to the carryforward of the unused balance of the non-refundable tax credit. The legislation will be amended to remove the requirement that carryforward amounts may only be applied to the taxation years in which the corporation qualifies for the refundable tax credit, for balances arising in taxation years that began before January 1, 2026.
• Clarifying the rate reduction applicable to companies that engage in intercompany outsourcing. These amendments will apply to taxation years beginning after December 31, 2025.

OTHER INITIATIVES

Adjustments to certain disclosure mechanisms

In 2009, the Ministère des Finances introduced a mandatory disclosure mechanism for certain transactions to enable tax authorities to quickly identify certain behaviours considered to present a high risk of non-compliance with the purpose and spirit of tax legislation. To expand its scope and improve its effectiveness, additional measures were introduced in 2015 and more recently as part of the Tax Fairness Action Plan.

Also in 2009, a preventive disclosure mechanism was introduced. Where the general anti-avoidance rule (GAAR) applies to a transaction, this mechanism allows a taxpayer to avoid the extension of the limitation period, the imposition of a penalty, and the listing of their business in the register of enterprises ineligible for public contracts (RENA), provided that the transaction (or series of transactions that includes the transaction) has been disclosed in accordance with the rules and within the prescribed time limit.

Given the significant increase in the number of information returns filed, along with the objective of enabling electronic filing and more thorough analysis by tax authorities, adjustments will be made to certain aspects of the mandatory and preventive disclosure mechanisms.

More specifically, these adjustments include:

• Removing the reference to the method of transmission of information returns.
• Removing the reference to proof of receipt of information returns.
• Removing the presumption regarding the 120-day period granted to tax authorities to request additional information concerning an information return.

These amendments will apply to transactions or a series of transactions initiated after March 18, 2026.

Harmonization with immediate expensing for greenhouse buildings

On January 26, 2026, the Prime Minister of Canada announced the implementation of an immediate expensing measure for greenhouse buildings. This measure allows producers to fully deduct the total cost of greenhouses acquired on or after November 4, 2025, and available for use before 2030. It is intended to increase supply and investment in food production over the medium term.

The Ministère des Finances du Québec has indicated that Québec tax legislation and regulations will be amended, based on their general principles, to align with and incorporate this measure relating to the immediate expensing of greenhouses.

Amendments to the Québec tax system will be adopted only after the enactment of any federal legislation or the adoption of any federal regulations giving effect to this measure, taking into account any technical amendments made prior to such enactment or adoption.

Improving the Voluntary Retirement Savings Plan

To maintain the Voluntary Retirement Savings Plan (VRSP) as a low-cost retirement savings tool and ensure its continued availability to all Québec residents, amendments will be made to establish a minimum contribution rate of 2% of salary, simplify the administration of contributions, and introduce new investment options that include employer contributions.

NEXT STEPS

For tailored tax and legal advice on how these measures affect you or your business, your own tax lawyers and accountants are best positioned to advise on these proposals. Your financial advisor can also assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact, align your investments accordingly, and help coordinate the right specialist for your circumstances.

¹ As announced by Finance Canada in its Budget 2025, a similar approach will apply to the filing of federal income tax returns beginning in the 2025 taxation year.