Ontario just released its 2026 Budget; here’s what it means for your business

On March 26, 2026, Ontario’s 2026 Budget was introduced. Our Grant Fund Pro team has read through the entire release to give you a run down of the biggest highlights this year that can make an impact on your business.

This $244.2 billion budget aims to protect Ontario from economic uncertainties brought about by global tensions. In the same vein, the budget highlights the protection of Ontario’s economy by supporting workers and businesses, creating jobs, attracting investment, and ensuring long-term economic growth.

We’ll go over the changes in-depth further down this post but here’s a quick list of all the things you can expect from the 2026 Budget:

• Provincial small business corporate income tax rate is lowered from 3.2% to 2.2% starting July 1, 2026.
• Allowing businesses to accelerate the income tax deduction for the cost of depreciable assets to run in parallel with changes made at the federal level.
• Investing $107 million for the renewal of support for the Critical Technology Initiatives program.
• Investing $9.4 million to renew grants for the Summer Company and Starter Company Plus programs delivered through the Small Business Enterprise Centers (SBECs) network.

Lower tax rates for small businesses

Currently, Ontario’s general corporate income tax (CIT) rate is 11.5%. Small Canadian-controlled private corporations (CCPCs) are eligible for a reduced small business CIT rate of 3.2% for the first $500,000 of their active business income.

In Ontario’s latest effort to continue supporting small businesses in the province, the small business CIT rate will be cut from 3.2% to 2.2%, starting July 1, 2026. The reduction would  be prorated for tax years straddling July 1, 2026.

It bears noting that there are no changes to the general CIT rate or to the $500,000 small business limit.

Faster writeoffs of capital investments and lowering business costs

In relation to the previous measure, accelerating capital cost recovery is also one of the measures introduced to encourage business investment in the province.

Thus, you can expect these changes based on the 2026 Budget:

• Immediate 100% writeoffs for:
  
  • Manufacturing and processing machinery & equipment, buildings, greenhouse buildings, certain clean tech assets, and zero-emission vehicles;
  • Productivity-enhancing assets; and
  • Capital expenditures for R&D.
• Accelerated depreciation:
  
  • For liquefied natural gas equipment and related buildings; and
  • From 4 per cent to 10 per cent for purpose-built rental housing.
• Enhanced first-year deductions of up to three times the regular amount for most other depreciable assets.

Critical Technology Initiatives (CTI) program

Ontario is investing an additional $107 million investment over the next three years starting 2026-2027 for the renewal of the CTI program.

We expect that an upcoming call for proposals will be opened soon. This funding will target projects that promote the acceleration of the development, commercialization, and adoption of critical technologies such as AI, quantum technologies, cybersecurity and advanced connectivity, as well as critical manufacturing or supply-chain technologies such as robotics and semiconductors, in key sectors, such as advanced manufacturing, automotive, life sciences, mining, defence, agriculture and smart infrastructure.

Renew grants for the Summer Company and Starter Company Plus programs

Summer Company is a funding program funded by the government of Ontario that helps young people between the ages of 15 and 29 start and run their own businesses. An award of up to $3,000 and other forms of support are available to eligible applicants.

Meanwhile, the Starter Company Plus program gives successful applications up to $5,000 to start, expand, or buy a small business. Other forms of support like one-on-one guidance and workshops are also available.

Both programs are delivered through the Small Business Enterprise Centres (SBECs) network.

With this investment, aspiring entrepreneurs can gain access to critical startup support, capital, and training needed to launch and sustain their businesses.

What does this mean for your business?

The impact of Ontario’s Budget 2026 to your business hinges on how you act on them.

For small businesses, a reduction in the corporate income tax (CIT) rate allows you greater flexibility to reinvest in your business.

If you’re anticipating capital expenditures, we recommend timing them properly. With the accelerated writeoffs and enhanced deductions for capital investments, you can significantly lower the cost of investing in equipment, R&D, or operational upgrades.

With the additional investments in several funding programs like the CTI, Summer Company, and Starter Company Plus, you can get greater access to capital and resources needed to boost your operations if you fit their criteria.

Overall, you get to decide how to take advantage of these changes. While good, it will require you to strategically align your plans to ensure you can turn these changes into actual growth.

Looking to explore further?

Our team at Grant Fund Pro can help you identify which of these incentives apply to your business and how to strategically combine them with existing funding programs. 

From eligibility assessment to full application support, we’ll help you make the most out of these opportunities. Reach out to our experts to get started.