Ontario Budget 2026: What Are the Key Changes and How Will It Impact Businesses?

Summary

Today, Ontario’s Finance Minister, the Hon. Peter Bethlenfalvy, introduced Budget 2026, entitled A Plan to Protect Ontario. The fiscal plan builds on last year’s economic protection framework, positioning Ontario to respond to U.S. tariffs, global market volatility, and continued supply chain uncertainty.

The Government is facing increased criticism as job growth declines and the high cost of living crisis persists. In response, Premier Doug Ford’s Government has framed Budget 2026 as a strategy to protect workers and businesses while strengthening Ontario’s competitiveness and long-term economic resilience. While the Budget acknowledges rising unemployment, the plan emphasizes investment attraction, industrial policy tools, domestic supply chains, infrastructure expansion, and affordability supports.

Budget 2026 continues the Ford government’s approach of maintaining high levels of program spending to support economic growth rather than pursuing near-term fiscal restraint. While revenues have improved relative to projections, increased spending on economic competitiveness, infrastructure, and public services delays the return to balance.

The budget maintains the government’s central messaging: protecting Ontario’s economy, keeping costs down for families, supporting workers, and building long-term economic capacity.

Political Context

Budget 2026 arrives amid continued trade uncertainty with the United States, ongoing inflationary pressures and slowing global growth. The Ford government continues to frame its fiscal approach as protecting Ontario’s economy from external risks while strengthening domestic capacity.

The government is expected to emphasize economic stability, investment attraction and infrastructure delivery following the budget. Opposition parties are likely to focus on the growing deficit, health-care pressures, and delayed return-to-balance timeline.

The budget maintains the government’s core messaging: affordability relief, investment in workers, economic competitiveness, and long-term infrastructure expansion.

Key Themes and Funding Highlights

Protect Workers and Businesses from Tariffs and Economic Uncertainty

The government continues and expands the support architecture first introduced in response to U.S. tariffs in 2025.

Ontario says it has announced nearly $30 billion in relief and support for workers and businesses since April 2025.
The Protect Ontario Account Investment Fund will receive up to $4 billion in provincial investment to crowd in pension fund and private capital into high-growth sectors including artificial intelligence, defence, advanced manufacturing, life sciences, biotechnology, and critical minerals R&D.
The province made up to $9 billion available in liquidity relief between April 1 and October 1, 2025, through a six-month deferral of payments under select provincially administered taxes.
The budget confirms support for workers through Protect Ontario Workers Employment Response (POWER) Centres, which the government says helped nearly 15,000 workers last year.
The government also notes additional $100 million invested into the Ontario Together Trade Fund (OTTF) in November 2025 to support near-term business investments that enhance trade resiliency, interprovincial sales, and reshoring of critical supply chains.
Ontario is proposing to cut the small business corporate income tax rate from 3.2 per cent to 2.2 per cent, a reduction of more than 30 per cent. The government says this would provide over $1.1 billion in relief over three years, benefit over 375,000 small businesses, and deliver up to $5,000 in annual 9ax relief per business.
The government would accelerate the income tax deduction for the cost of equipment and other assets, subject to federal legislation, providing over $3.5 billion in Ontario income tax relief over four years to qualifying businesses.
Ontario says businesses would benefit from nearly $10 billion in estimated cost savings and support this year through actions taken since 2018.
$64.2 million over three years through the In-Class Enhancement Fund, creating approximately 4,000 new apprenticeship training seats annually.
Provide additional investments to expand skilled trades training infrastructure, including modernization of equipment, expanded hands-on training capacity, and strengthened partnerships between employers, unions and training providers.
Ontario continues to support the Ring of Fire and is calling on the federal government to match or exceed Ontario’s $1 billion commitment for related infrastructure. Construction on all-season roads is planned to start in June 2026, with roads beginning to open in November 2030, five years ahead of schedule.
The government states its nuclear expansion plan is expected to create 150,000 jobs and add over $800 billion to Canada’s economy.
Ontario is supporting four small modular reactors at Darlington, including $1 billion through the Building Ontario Fund. Once built, the four SMRs are expected to generate enough electricity to power the equivalent of 1.2 million homes.
The new Wesleyville nuclear project is projected to support 10,500 jobs, including 1,700 jobs in Port Hope, and contribute $235 billion to Ontario GDP over its lifespan.
Ontario is also positioning itself for the proposed federal Defence, Security and Resilience Bank, which it says could create up to 3,500 direct jobs plus thousands of indirect jobs if headquartered in Toronto.

Protect Ontario by Building

Infrastructure remains a central economic and political pillar of the government’s strategy.

Ontario’s capital plan now totals over $210 billion over 10 years, including $37 billion in 2026-27, which the government describes as the most ambitious provincial capital plan in Canadian history.
Within that plan, the province outlines approximately:
- $31 billion over 10 years for highways
- $63 billion over 10 years for public transit
- $64 billion over 10 years for health infrastructure, including nearly $50 billion in capital grants.
Infrastructure expenditures total $36.7 billion in the relevant fiscal table after partner funding adjustments, including $24.4 billion in provincial investment in capital assets.
Major highlighted projects include Highway 413, the Bradford Bypass, a Highway 401 tunnel feasibility study, subway expansion in the GTA, GO service expansion, East Harbour Transit Hub, hospital expansion projects, and school and childcare builds.

Protect Ontario’s Borders and Communities

Public safety remains a prominent budget theme.

The province is investing $32.5 million in 2026-27 for two new border security grant programs under Operation Deterrence 2.0.
Since Operation Deterrence launched in January 2025, Ontario says it has helped trace over 550 illegal firearms, including over 440 traced to the United States, seize 4,152 kilograms of cocaine, 192 kilograms of fentanyl, and lay 641 charges through OPP border-related patrols.
The budget also references historic investments in correctional capacity, expansion of specialized bail prosecution teams, easier police recruitment and training, modernization of police training facilities, and stronger support for compliance enforcement against repeat violent offenders.

Protect Ontario by Keeping Costs Down

Affordability measures remain central to the government’s political presentation of the budget.

The government says it committed almost $11.9 billion in 2025-26 to support families and individuals.
Ontario Electricity Rebate support continues, lowering the monthly bill for a typical residential consumer by about $36 per month.
Ontario is proposing to remove the full 8 per cent provincial portion of the HST for eligible buyers of new homes valued up to $1 million, for up to $80,000 in relief, and maintain that amount for new homes valued up to $1.5 million. The government says this could support up to 14,000 construction jobs and boost Ontario real GDP growth by 0.2 percentage points.
The province is also seeking to expand the earlier first-time home buyer proposal so eligible buyers who purchased a new home on or after March 20, 2025, could qualify.
The permanent gas and fuel tax cuts have already saved Ontarians $2.1 billion since July 2022, according to the government.
Removal of tolls on the provincially owned portion of Highway 407 East is estimated to save commuters $7,200 annually.
The One Fare program is extended by two years. The government says daily users can save up to $1,600 per year, and that the program has saved Ontarians nearly $233 million since launching in 2024.

Protect Ontario’s Public Services

Health Care

Health remains the largest area of program spending.

Health sector spending rises from $97.8 billion in 2025-26 to $101.2 billion in 2026-27 and is projected to reach $106.7 billion by 2028-29.
The government is continuing its $3.4 billion Primary Care Action Plan over four years.
Ontario says it is making a historic hospital investment for the fourth consecutive year, with over $1.1 billion in additional funding for hospitals and $139.4 million in additional funding for long-term care homes.
Health infrastructure investments total $64 billion over 10 years, including nearly $50 billion in capital grants, supporting more than 50 major hospital projects and approximately 3,000 new beds over 10 years.
The budget also notes that Ontario’s incremental health sector investments exceeded federal health transfer increases: $7.0 billion vs. $2.1 billion in 2023-24

Education and Childcare

Education sector spending rises from $40.5 billion in 2025-26 to $40.8 billion in 2026-27.
Ontario is providing $66 million annually through the Classroom Supplies Fund, equal to $750 per elementary school homeroom teacher per school year.
The province has signed a one-year $3.6 billion extension of the CWELCC agreement through March 31, 2027, including a one-time $695 million allocation to hold parent fees at current levels, averaging about $19/day and capped at $22/day, until December 31, 2026.

Postsecondary Education

Ontario announced $6.4 billion in new funding for the postsecondary sector to support colleges, universities, and Indigenous Institutes.
Postsecondary spending is projected at $14.0 billion in both 2025-26 and 2026-27.

Social Services and Community Supports

Children, Community and Social Services spending is projected at $21.5 billion in 2025-26 and $21.4 billion in 2026-27.
The province is providing $965 million to the Ontario Autism Program in 2026-27, including $186 million in new funding.
Ontario is investing $20 million for the Liam Riazati Memorial Fund to help licensed childcare centres install preventive concrete barriers.

Overview:

The central theme of Budget 2026 is protecting Ontario’s economy in the face of global trade uncertainty, tariffs, and continued cost-of-living pressures. The government positions the fiscal plan as both a near-term response to economic volatility and a long-term strategy to strengthen Ontario’s competitiveness, resilience, and domestic capacity.

Budget 2026 builds on the government’s economic protection framework by combining tax relief, workforce development, infrastructure investments and industrial policy. Key measures include investments in skills training, nuclear energy expansion, critical minerals development, and targeted cost-of-living relief for households and businesses. These initiatives are framed as practical responses to global uncertainty rather than a shift toward fiscal restraint.

The budget also reflects ongoing fiscal pressures, with program spending increasing to support health care, infrastructure, and workforce initiatives. Ontario projects a $13.8 billion deficit in 2026–27, with a return to balance expected in 2028–29. The government continues to maintain prudence through contingency planning and reserves, while emphasizing that targeted spending is necessary to protect jobs and support long-term economic growth.

Keeping Costs Down

The Ford government continues to highlight cost-of-living relief as a key pillar of Budget 2026.

Ontario is proposing to remove the full 8 per cent provincial portion of the HST for eligible buyers of new homes valued up to $1 million, for up to $80,000 in relief, and maintain that amount for new homes valued up to $1.5 million. The government says this could support up to 14,000 construction jobs and boost Ontario real GDP growth by 0.2 percentage points.

The One Fare Program is extended by two years, allowing riders to transfer between transit systems while paying only one fare. The province reports that the program has already saved commuters nearly $233 million, with individual users saving up to $1,600 annually.
The government is maintaining the permanent reduction of gasoline and fuel tax rates, which has delivered over $2 billion in savings to Ontarians since 2022.
Ontario continues to remove tolls on the Highway 407 East extension, saving daily commuters an estimated $7,200 annually.

These affordability measures build on previous actions to reduce taxes and fees, with the government signalling further efforts to reduce regulatory burdens affecting households and small businesses.

Helping Workers and Protecting Jobs

Budget 2026 expands the government’s investment in workforce development and skilled trades training to address labour shortages and support economic growth. The government continues to frame labour shortages as a key challenge to completing projects.

These investments are intended to retrain and maintain workers impacted by tariffs and strengthen Ontario’s workforce in sectors such as construction, manufacturing, and energy.

Ontario continues to expand in-class apprenticeship training to help more apprentices across the province develop the skills needed for well-paying careers in the skilled trades. The government is investing $64.2 million over three years to create up to 4,000 new in-class training seats annually, accelerating access to required classroom instruction. This investment also covers the $10-per-day Level 1 in-class training fee, reducing financial barriers for apprentices. The initiative builds on the $159.3 million commitment made in the 2025 Budget to strengthen and modernize Ontario’s skilled trades training system.

Looking deeper into the numbers, it appears there are funding decreases in Labour. While there are cuts to the Ministry’s base funding, the Government is increasing overall spending in training programs. The money is being reallocated from ministry base operations toward employment and training programs.

Another area of focus for retraining is the Government’s continued support for POWER Centres as a targeted, frontline response for workers impacted by layoffs. These power centres are helping the workers laid off access retraining and Employment Ontario services. Funding is anticipated to continue through a joint federal-provincial Canada–Ontario Tariff Response Initiative. The Budget places notable emphasis on Union partnerships in this program.

It is also noteworthy that the Skills Development Fund has not been mentioned in the Budget. While the program is expected to continue, notwithstanding the controversy surrounding the program’s management, it has not been included verbally in the text of the budget.

The government also continues to support partnerships with employers, unions, training providers and community organizations, with additional intake rounds for workforce programs expected later this year.

Building Ontario

Budget 2026 reinforces Ontario’s economic competitiveness strategy through investments in energy, mining, manufacturing, and infrastructure. Ontario is proposing to cut the small business corporate income tax rate from 3.2 per cent to 2.2 per cent, providing over $1.1 billion in relief over three years and benefiting over 375,000 small businesses. The government estimates up to $5,000 in annual tax savings per business. The government is also accelerating income tax deductions for capital investments, which is expected to provide over $3.5 billion in tax relief over four years.

Ontario continues to support development of the Ring of Fire, reiterating its $1 billion commitment to infrastructure and calling for federal cost matching. Construction of all-season roads is expected to begin in June 2026, with opening targeted for November 2030.

Energy investments remain central to the province’s growth strategy:

Support for four small modular reactors at Darlington, including $1 billion through the Building Ontario Fund.
The reactors are expected to power 1.2 million homes.
The Wesleyville nuclear project is projected to support 10,500 jobs and contribute $235 billion to Ontario GDP
The broader nuclear expansion plan is expected to create 150,000 jobs and add over $800 billion to Canada’s economy.

Ontario’s capital plan remains one of the largest in its history, with over $210 billion in infrastructure spending over 10 years, supporting highways, transit, hospitals, schools and housing-enabling infrastructure.

Investments In Health Care

Health care remains the largest area of provincial spending in Budget 2026, with continued investments in capacity expansion, workforce recruitment and access to care. Total health sector spending is projected to reach approximately $101.2 billion. The government is prioritizing improved access to primary care, expansion of hospital capacity, and recruitment of additional health care workers.

Investments include continued funding to connect more Ontarians to primary care providers, expansion of community-based services, and ongoing support for long-term care and supportive housing. Workforce initiatives aim to address staffing shortages across hospitals, community care and long-term care settings.

These investments are intended to improve access and system performance, while also responding to growing demand from population growth and demographic change.

What to Expect Next

The Ontario Legislature is scheduled to rise for the summer recess on June 4, with members expected to return for the fall sitting on September 14.

Following the tabling of Budget 2026, the government is expected to spend the coming months reinforcing its message of economic protection, competitiveness and self-reliance. The emphasis will likely remain on tariff readiness, investment attraction, affordability measures and visible infrastructure progress.

The fiscal challenge for the government will be credibility. Ontario is not facing an immediate fiscal crisis, but the return-to-balance path is now more dependent on future spending discipline and continued economic resilience. As interest on debt rises and deficits remain elevated in the near term, the government will need to show that its competitiveness agenda can produce not only political traction, but fiscal sustainability as well.