The Canadian province Quebec’s finance minister, Eric Girard, delivered the province’s 2025-26 budget on 25 March 2025.

The minister unveiled a budget projecting a CAD 13.6 billion deficit, with CAD 2.2 billion allocated for debt repayment and a balanced budget target set for 2029-30. Total government spending is CAD 165.8 billion, including CAD 156.1 billion for operations and CAD 9.7 billion for debt servicing. The budget was presented amidst concerns over potential US tariffs averaging 10% on Canadian goods over the next two years.

The 2025-26 budget keeps corporate and personal tax rates unchanged.

The budget overhauls the scientific research and experimental development (SR&ED) tax credit regime and replaces it with the tax credit for R&D, innovation, and pre-commercialization (CRIC). It extends investment incentives, adjusts the mining tax credit, and adds a new reporting requirement for Quebec taxpayers with foreign property.

Corporate income tax rates

No changes are proposed to corporate tax rates or the CAD 500,000 small-business limit.

Tax credit for R&D, innovation and pre-commercialization (CRIC) 

This tax credit aims to boost innovation in strategic sectors, renew the Quebec Life Sciences Strategy, and support corporate research and innovation in priority sectors. The proposed budget introduces the CRIC, a refundable tax credit for R&D, innovation, and pre-commercialization and replaces various existing credits to simplify fiscal measures. It expands eligibility to include pre-commercialization and capital expenditures, applying to fiscal periods starting after 25 March 2025.

The CRIC base rate is 20%, rising to 30% for up to CAD 1 million in eligible expenditures, regardless of the corporation’s assets.

The tax credit for an eligible corporation is based on the excess of its R&D and pre-commercialization expenditures for the tax year over its exclusion threshold. The exclusion threshold is larger than CAD 50,000 or the total of the “R&D employees threshold” and the “pre-commercialization employees threshold.”

Securities options deduction

With the introduction of the CRIC and the removal of four R&D tax credits, the budget proposes changes to the securities options deduction. After reforms, the eligibility rate would increase to 50% to align with CRIC parameters.

Tax credits for developing e-businesses (TCEB)

The proposed budget aims to modernise the TCEB by prioritising e-business activities integrating AI, expanding criteria to include data processing and hosting for AI businesses, and eliminating activities related to maintenance or evolution. These changes would take effect for tax years starting after 31 December 2025.

Abolition of tax credit for Quebec businesses

The budget proposes abolishing the tax credit to promote synergy between Quebec businesses, effective 26 March 2025.

Extension of refundable tax credit for print companies

The budget extends the refundable tax credit to support the digital transformation of print media companies. The eligibility period for qualified expenditures will now end on 31 December 2025.

Abolition of additional capital gains exemption for resource properties

The budget plans to remove the additional capital gains exemption for certain resource properties, effective for dispositions after 25 March 2025.

Refundable tax credit changes for mining companies

The budget introduces changes to the refundable tax credit for mining in Quebec. Starting after 25 March 2025, development expenses related to mining resources in Quebec will qualify as eligible expenses for the tax credit.

Fuel tax

The 2025-26 budget plans to end the fuel tax refund for pure biodiesel purchased after 25 March 2025.

Tobacco tax

The budget proposes legislative or regulatory changes to detect tobacco smuggling, increase pressure on smugglers, and support ACCES partners in investigations and prosecutions.

Changes to vehicle registration and exemptions for electric and plug-in hybrid vehicles

The budget proposes changes to vehicle registration fees starting 1 January 2027. The luxury vehicle registration fee threshold will be raised from CAD 40,000 to CAD 62,500. The exemptions for electric and plug-in hybrid vehicles will be removed. An annual fee will also be introduced for electric vehicles (CAD 125) and plug-in hybrids (CAD 62.50).

Tax compliance for foreign property owned by Quebec residents

The budget introduces a new reporting requirement for foreign property outside Canada, using a prescribed form to be filed with Revenu Quebec for the relevant tax year or fiscal period. This measure will take effect on a date after the bill is passed.

Quebec’s new reporting requirement for foreign property aligns closely with federal tax rules, using similar definitions and the CAD 100,000 cost threshold for designated foreign property. The reporting entity must submit the new prescribed form to Revenu Quebec no later than the filing deadline for its applicable tax return for the year.

New penalties, mirroring federal ones, will be introduced in Québec for failing to file the new form: CAD 500 per month (up to CAD 12,000 over 24 months) or double if the filing deadline is missed after formal notice. For delays beyond 24 months, an additional penalty of 5% of the total cost of the designated foreign property applies.

False statements or omissions will incur a penalty of CAD 24,000 or 5% of the total cost of the designated foreign property, whichever is higher.