This afternoon, the Honourable Peter Bethlenfalvy, Ontario’s Minister of Finance, delivered a record budget in the Ontario Legislature. The highly anticipated 2026 budget is titled “A Plan to Protect Ontario.”
The 2025-26 budget, totalling $244.2 billion, has a projected deficit of $12.3 billion, $2.3 billion lower than the 2025 Budget projection.
The government is projecting deficits of $13.8 billion in 2026-27 and $6.1 billion in 2027-28, before returning to a surplus of $600 million in 2028-29. The projected deficits are driven by investments to address the massive need for housing and living affordability, public services such as health care, and infrastructure, and measures to protect and support Ontario’s economy in response to U.S. tariffs.
Ontario’s real GDP is projected to rise 1.0% in 2026, increase by 1.7% in 2027, and increase by 1.8% in 2028.
Budget Highlights
Tariff Response
- The 13% HST will be removed for eligible buyers on homes up to $1 million (with a maximum of a $130,000 relief), but the amount is maintained for homes valued up to $1.5 million.
- Small business Corporate Income Tax (CIT) rate drops from 3.2% to 2.2% effective July 2026.
- Accelerated capital cost write-offs will allow businesses to accelerate income tax deductions for depreciable assets, including immediate 100% writeoffs for manufacturing, R&D and clean technology assets, providing over $3.5B in Ontario income tax relief over four years.
- Protect Ontario Account Investment Fund: Province investing up to $4B in Artificial Intelligence (AI), defence, advanced manufacturing, life sciences, biotechnology and critical minerals.
- US procurement/trade diversification: $31B in transportation infrastructure to connect to new trade gateways, including ports.
- Ontario Together Trade Fund to be topped up to $150M.
- Investment of $9.4M over three years for Summer Company and Starter Company Plus programs; plus $3M for Small Business Enterprise Centres (SBECs) to expand advisory services.
- Critical Technologies Initiatives (CTI) program renewed: $107 million over three years starting 2026–27 to accelerate development and adoption of AI, quantum technologies, cybersecurity, advanced connectivity, robotics and semiconductors in key sectors.
Infrastructure
- Over a $210B 10-year capital plan ($37B in 2026-27) for highways, hospitals, transit and community infrastructure.
- The province is assuming the City of Toronto’s role, taking ownership of City-owned land to support the expansion of the Billy Bishop Airport.
- Federal-provincial funding for municipalities that reduce development charges to accelerate affordable housing construction.
- Ring of Fire all-season roads construction begins in June 2026 and opens in November 2030.
Health Care
- Additional $1.1B over three years for home and community care (nurses, PSWs, therapists). Long-Term Care (LTC) funding ensures every resident receives an average of four hours of daily direct care from nurses and PSWs.
- $250M expansion (Saugeen Ojibway Nation-Bruce Power partnership) to grow medical isotope production for cancer diagnosis and treatment.
- Investment of $101.2B in total health spending with a $64B health infrastructure plan over 10 years, including $50B in capital grants and approximately 3,000 new hospital beds.
- Investment of $1.1B additional hospital funding for 2026-27.
- $124.2M over three years for clinical training of 2,000 Registered Nurses (RNs) and 1,000 Registered Practical Nurses (RPNs).
- Ontario Autism Program: $965M in 2026-27 (nearly $1B annually), including $186M in new funding, enabling more children and youth to access core clinical services.
Education
- Ontario Student Assistance Program (OSAP): Starting fall 2026, OSAP will shift from a mostly grant-based program to loans with non-repayable grants dropping from 85% down to 25%, with at least 75% coming as repayable loans. Career colleges will no longer be eligible for grants.
- New long-term funding model bringing $6.4B into the post-secondary sector over four years, raising annual operating funding to $7B (30% increase), funding 70,000 more in-demand seats and better meeting the needs of small, rural, Northern, French-language colleges, universities and Indigenous Institutes.
- $95M in 2026-27 to sustain digital math tools, online course catalogue, early literacy screening (Senior Kindergarten through Grade 2), and summer mental health services.
- Investment of $66M per school year for the Classroom Supplies Fund, with a $750 annual Classroom Supplies Card for every elementary homeroom teacher.
- $30B over 10 years for school and child care capital ($22B in capital grants).
Housing and Affordability
- The HST rebate stimulus is expected to generate 8,000+ additional housing starts and support 14,000 construction jobs.
- The Ontario Municipal Partnership Fund has increased to $600M by 2026.
- Gasoline and Fuel Tax is permanently at 9 cents/litre, saving approximately $115/year in household savings.
- One Fare extended two more years, providing up to $1,600/year savings for Greater Toronto and Hamilton Area (GTHA) daily commuters.
Skilled Trades and Labour
- Protect Ontario Workers Employment Response (POWER) Centres: 10 centres have helped 15,000 workers with transition assistance, including Algoma Steel (Sault Ste. Marie) and Interfor Ear Falls sawmill workers.
- Skilled trades/labour mobility: The “As of Right” regulation removes interprovincial barriers for skilled trades workers, with active MOUs with 10 provinces and territories.
Artificial Intelligence and Cybersecurity
- AI strategy: Comprehensive provincial AI strategy to launch summer 2026 covering firm scale-up, sovereign compute, sector adoption and governance. AI adoption is projected to generate $122B in Ontario GDP and an average of 17,600 new jobs/year between 2025–2035.
- Ontario launched REGi, the first AI-powered tool in North America using a Large Language Model for identifying regulatory compliance requirements and red tape reduction opportunities; earned CFIB’s Golden Scissors Award.
Indigenous Communities
- Electricity equity: Hydro One’s Equity Partnership Model provides First Nations up to 50% ownership in new transmission lines.
- $3B Indigenous Opportunities Financing Program through the Building Ontario Fund.
- Ontario Junior Exploration Program will have $30M over three years, with a New Prospector Stream and enhanced Indigenous Participation Incentive.
Life Sciences
- Life Sciences Scale-Up Fund (LSSUF): $24M over three years to help SMEs in human health sciences commercialize and scale products.
- Investing $117.1 million over three years (starting 2026–27) through the Ontario Research Fund–Research Infrastructure (ORF-RI) to upgrade and equip advanced research facilities across priority sectors.
- Ontario targeting 85,000 life sciences jobs by 2030 (25% increase from 2020).
- $26M over three years to sustain research institutes and support commercialization.
Municipality Funding
- Life Sciences Scale-Up Fund (LSSUF): $24M over three years to help SMEs in human health sciences commercialize and scale products.
- Investing $117.1 million over three years (starting 2026–27) through the Ontario Research Fund–Research Infrastructure (ORF-RI) to upgrade and equip advanced research facilities across priority sectors.
- Ontario targeting 85,000 life sciences jobs by 2030 (25% increase from 2020).
- $26M over three years to sustain research institutes and support commercialization.
Other
- LCBO as exclusive wholesaler: Effective April 1, 2026, wholesale markups will be reduced to about $200M, and alcohol taxes will be simplified by $60M.
- Ontario Cannabis Store/retail: By July 1, 2026, fully open LCBO listing process; Ontario distillers can deliver spirits-based RTD beverages directly to licensees.
- Ontario–Nova Scotia's first bilateral Direct-to-Consumer (DTC) alcohol sales agreement was signed on March 2, 2026, with a plan to expand to other provinces.
- $8.3M additional funding for the Bail Compliance and Warrant Apprehension Grant program in 2026–27.
