Overview
Hon. Peter Bethlenfalvy, Ontario’s Minister of Finance, has introduced the 2026 Budget titled A Plan to Protect Ontario. This budget continues the Ford government’s focus on economic resilience, as Ontario continues to face geopolitical challenges resulting from the trade war with the U.S. while lowering costs for workers and businesses.
Budget 2026 positions Ontario as the only large province with a path to balance by 2028-29. Despite turbulent economic conditions, the government highlighted new economic growth policies including:
- Removing the full 13 per cent HST for all buyers of new homes up to $1.5 million.
- Cutting the small business tax rate from 3.2% to 2.2% effective July 1, 2026.
- Establishment of a $4B Protect Ontario Account Investment Fund, to enhance productivity and competitiveness.
While the Budget will not satisfy all stakeholders, Budget 2026 continues the Ford government’s longstanding philosophy of removing barriers to economic growth while lowering taxes.
Key Figures
- Total Revenue: $231.9 billion (compared to $226.6 billion last year)
- Total Spending: $244.2 billion (a 12.1% increase from last year)
- Deficit: $13.8 billion with deficits continuing through to 2028-29
- Contingency Fund: $1.5 billion set aside for unexpected spending, including disasters and emergencies, and emerging priorities that may arise during the year.
Sector Highlights
Health Care
- Primary Care Action Plan: The Ontario government is allocating $3.4 billion towards expanding and maintaining the Primary Care Action Plan, to connect a further 2 million Ontarians to primary care.
- Primary Care Teaching Clinics: The government is investing up to $300 million to support the creation and expansion of 18 clinics, to connect more people to primary care.
- Learn and Stay Grant: The government announced a commitment to expand the Learn and Stay Grant to two new medical laboratory programs in Northern Ontario.
- Clinical Education for Nurses: To address health human resource needs, Ontario will invest an additional $124.2 over three years for clinical training and education funding to expand the creation of 2,000 registered nurses and 1,000 registered practical nurse seats at publicly assisted colleges and universities.
- Long-Term Care: The government announced new funding of $139.4 million to support seniors accessibility to long-term care.
Education
- Expanding School Infrastructure: The government is continuing to invest $30 billion over 10 years to build new and redeveloped schools and child care spaces.
- School supplies: Budget 2026 commits to providing each elementary school homeroom teacher with $750 annually for classroom supplies.
- The province is establishing a new long-term funding model that will bring an additional $6.4 billion into the sector over four years and raise annual operating funding to $7 billion.
Infrastructure
- Transportation: The government recommitted to their 10-year capital plan to invest $210 billion, including $37 billion in Budget 2026, to build highways, transit, and community infrastructure.
- Highways: The government recommitted to Building Highway 413 and advancing work on the Bradford Bypass.
- Highway 401: Beginning Spring 2026, the Government will undertake a feasibility study to assess the potential for a new vehicle and transit tunnel expressway under Highway 401.
Energy, Economic Development and Trade
- Protect Ontario Account Investment Fund: The government will invest up to $4 billion into this fund, which will focus on developing industries such as artificial intelligence, defence, advanced manufacturing, life sciences, and research and development within the critical mineral sector.
- Trade Mobility: To further support trade within Canada and abroad, Ontario is investing $31 billion in roads, highways and other transportation infrastructure to ensure goods can reach new trade gateways.
- Permitting: Review all of Ontario’s economic development-focused permits by the end of 2028, with the goal of eliminating or transforming 35 per cent or more.
- AI Data Centres: The government is developing a coordinated plan, to be launched in summer 2026, that will support the scale-up of Ontario-based AI firms, expand access to sovereign compute and data resources and ensure the province has the digital and grid-ready energy infrastructure required for next-generation innovation.
- Critical Technology Initiatives: Through an additional $107 million investment over three years, starting in 2026–27, the government is renewing the Critical Technology Initiatives (CTI) program and there will be an upcoming call for proposals to seek CTI delivery partners.
- Variable Life Benefits: The government is proposing legislation to enable certain pension plans — defined contribution plans or plans with additional voluntary contributions — to offer a new option for retirees called a Variable Life Benefit (VLB). The government is targeting January 1, 2027, as the date when eligible plans could begin to offer VLBs.
Tax Changes
- Lower Cost of Capital Investments: The government intends to lower the cost of capital investments by allowing businesses to accelerate the income tax deduction for the cost of depreciable assets, in parallel with changes announced by the federal government.
- Small Business Corporate Income Tax Cuts: Proposing to cut small business Corporate Income Tax (CIT) rate by over 30%.
- HST Tax Cut on New Homes: Providing a temporary rebate on the full 13% provincial portion of the HST on all new homes valued at up to $1 million, subject to federal legislative enactment.
Alcohol Sector and Liquor Markup Reform
- LCBO Exclusive Wholesaler: As of April 1, 2026, the LCBO will become the exclusive wholesaler for all retailers, bars and restaurants selling alcohol to the public. The government is reducing wholesale mark-ups by almost $200 million to support producers and retailers succeed in the expanded marketplace.
- Improving Choice and Convenience: By July 1,2026, the LCBO will implement a fully open listening process which will provide retailers access to the full catalogue of the LCBO to improve consumer choice and convenience.
- Reducing Red Tape for Producers: Starting on July 1, all Ontario distillers will be allowed to deliver spirits-based RTD beverages directly to eligible licensees. The government is also providing additional flexibility for suppliers to recover delivery costs from wholesale customers when directly delivering their products. Later this summer, convenience stores will have more options on how they use distributors, including third parties. The government will also work with the LCBO to allow domestic beer manufactures with Ontario facilities to ship products directly to their final destination.
Cost of Living and Support Framework
- Capping Resale Ticket Prices: The government announced their plan to make it illegal for tickets to concerts, cultural events, sports games, theatre performances, and other live events held in Ontario to be resold for more than their original cost.
- Rewards Points Programs: The government will undertake a consultation to assess strengthened protections for consumers who participate in rewards points programs.
- Transit One Fare: The government is extending the One Fare transit program for an additional two years.
What’s Next?
Debate on the Budget will commence immediately and continue for several weeks before passage. Given the PC’s strong majority, stakeholders should expect that the legislation will pass before the House rises, currently scheduled for June 4th.
Stakeholders should note that the previous 2025 budget legislation bypassed the committee stage through time allocation. This procedural move eliminated any opportunity for amendments. While the 2024 budget did reach a committee for review, the government eventually passed that legislation without making any changes to the original text.
Stakeholders should monitor for the timing of introduction of the Budget’s legislation, which may signal if there will be an opportunity to amend the legislation at Committee. After June 4th, it is expected that there will be a series of post-budget announcements.
The Fall Economic Statement will follow in November, providing stakeholders with an additional opportunity to advocate for funding or policy changes. Preparations for this statement will begin over the summer and early fall.
