2026 Ontario Provincial Budget

On March 26, 2026, the Government of Ontario released its 2026 Budget, A Plan to Protect Ontario. The fiscal plan arrives during a period of continued economic uncertainty shaped by U.S. tariffs, trade disruption, slower growth, and ongoing pressure on Ontario’s fiscal flexibility. It builds on the government’s recent emphasis on protecting workers, businesses, and communities, while continuing to position Ontario as a more competitive, resilient, and self-reliant economy. The following is a summary of highlights from the perspective of Ontario’s business community, organized according to the OCC’s four economic imperatives to drive inclusive, sustainable growth.

A Competitive Business and Trade Environment

Investment Incentives and Tax Reform

Budget 2026 includes several tax measures to lower business costs and spur growth. This includes a cut to the small business corporate income tax by more than 30 per cent, from 3.2 per cent to 2.2 per cent, which is expected to provide over 375,000 small businesses with an estimated $1.1 billion in tax relief over the next three years. In addition, the province intends to allow businesses to accelerate their income tax deductions for the cost of newly acquired depreciable assets, including capital expenditures for research and development (R&D), machinery, and equipment. These measures would provide over $3.5 billion in Ontario income tax relief to qualifying businesses over the next four years.

The Budget further introduces measures to strengthen Ontario’s investment pipeline and attract strategic capital. This includes an additional $600 million for the Invest Ontario Fund to provide investor certainty and create jobs, alongside a $4 billion investment in the Protect Ontario Account Investment Fund, dedicated to high-growth industries such as artificial intelligence (AI), defence, advanced manufacturing, and life sciences. The fund will leverage investment from pension funds and other private capital to enhance productivity, create jobs, reinforce domestic supply chains, and support long-term economic growth.

Budget 2026 also includes measures to help businesses grow and scale, with $9.4 million over three years to renew entrepreneurship grants for the Summer Company and Starter Company Plus programs, delivered through the Small Business Enterprise Centres (SBEC) network, which provide services such as business advisory support and succession planning.

Finally, Budget 2026 includes measures to simplify and reduce several legacy alcohol taxes, including the removal of the environmental tax on products sold in producer stores, eliminating a long-standing irritant for craft brewers, distillers, cideries and wineries.

OCC Analysis

As outlined in the 2026 Ontario Economic Report, shifting global trade dynamics and historically low business confidence underscore the need to create the conditions for investment and long-term growth. The OCC welcomes targeted SME tax relief and accelerated capital cost allowances, aligned with the OCC’s call to lower business costs and incentivize productivity-enhancing investment.  Furthermore, the $4 billion Protect Ontario Account and the expanded Invest Ontario Fund further support efforts to secure domestic supply chains, anchor capital, and scale strategic, high-growth sectors such as AI and life sciences.

To fully unlock growth, the OCC continues to urge the Government of Ontario to undertake a comprehensive fiscal review to eliminate unnecessary complexity for businesses and incentivize business investment in productivity, technology and skills development, building on welcome steps taken to simplify beverage alcohol taxation. This should include dedicated transition financing, succession advisory grants, a policy framework for Employee Ownership Trusts, and other tax structures that keep mature businesses rooted in Ontario communities.

Support for Trade-Impacted Businesses & Communities

Budget 2026 reinforces business protection and trade resilience by continuing to invest in the Protect Ontario Financing Program and the Trade-Impacted Communities Program, supporting economic stability in strategic sectors and export growth. In addition, the deferral of select provincially administered taxes, such as gasoline, employer health, and mining, has provided $9 billion in liquidity relief to approximately 80,000 businesses.

OCC Analysis

The OCC commends continued investments in trade-related programs, which, alongside tax deferrals, provide essential cash-flow for trade-exposed businesses. These measures help firms retain workers, manage rising costs, and adapt operations amid supply chain disruptions, while strengthening resilience against geopolitical shocks, and ahead of Canada-United States-Mexico Agreement (CUSMA) negotiations.

Strengthening Manufacturing, Procurement & Trade Diversification

Budget 2026 includes several additional measures to support Ontario’s industrial base, supply chains, and market access. The Buy Ontario Act (Public Sector Procurement), 2025, is intended to prioritize Ontario goods and services, then Canadian, across public-sector procurement for capital infrastructure and fleet purchases.

The Budget maintains $85 million in support for the auto sector through modernization programs such as the Ontario Automotive Modernization Program and the Ontario Vehicle Innovation Network to help suppliers modernize equipment and adopt new technologies. Budget 2026 also adds an additional $100 million to the Ontario Together Trade Fund to help SMEs diversify markets, strengthen trade resilience, and reshore critical supply chains.

OCC Analysis

As the OCC has called for measures to help firms navigate global headwinds and tariff disruptions, we welcome steps taken to shield Ontario’s industrial base. The OCC is also encouraged to see a continued focus on supporting businesses as they explore trade diversification opportunities amid the removal of interprovincial trade barriers, a stated imperative of the OCC.

While the intention of the Buy Ontario Act is to prioritize Ontario- and Canadian-based goods and services in public-sector procurement, including capital infrastructure and fleet purchases, the OCC urges the government to carefully implement Buy Ontario policies to preserve competitive and value-based outcomes, patient safety, and infrastructure quality. Clear exemptions and alternate procurement pathways will be essential for health-critical, technically complex, and infrastructure-intensive procurements, mitigating unintended consequences where domestic supply is limited.

Arts, Culture, and Tourism Sectors

Budget 2026 includes several targeted investments to support Ontario’s arts, culture, and tourism sectors, including $29 million over three years for the Lakeview Village Cultural Pier in Mississauga and $35 million over two years for the Dani Reiss Modern and Contemporary Gallery expansion at the Art Gallery of Ontario.

The Budget also provides $21 million in additional annual operating support for the Art Gallery of Ontario and the Royal Ontario Museum. These measures align with longstanding calls to recognize the sector as a key economic driver and to invest in cultural assets that enhance tourism, support placemaking, and strengthen regional economies.

Finally, the Budget includes a $300 million fund to repair, upgrade, or construct new sport and recreation facilities across the province.

OCC Analysis

Tourism and hospitality continue to play a vital role in supporting dynamic, competitive communities across Ontario. The OCC is encouraged to see investment in tourism infrastructure, such as the Lakeview Village Cultural Pier in Mississauga. This investment builds on the tourism sector’s significant economic contribution, outlined in the OCC’s The State of the Ontario Tourism Industry report, estimated at $36 billion to Ontario’s GDP, and reflects the importance of strengthening destination assets to bolster visitor economies.

The OCC further welcomes operating funding for museums and art galleries that strengthen cultural infrastructure, support jobs, and enhance Ontario’s creative economy. In 2022 alone, the sector generated $26 billion in GDP and supported over 270,000 jobs.

The OCC values these announcements, and urges the Government of Ontario to go further. Ontario should recognize arts, culture, and tourism as key economic and community infrastructure assets, integrating culture-based facilities into community planning to support workforce development, market access and regional economic development.

Advancing Ontario’s AI Capacity

Budget 2026 allocates an additional $107 million over three years to renew the Critical Technology Initiatives Program, supporting the development, commercialization, and adoption of technologies such as AI, quantum, cybersecurity, robotics, semiconductors, and advanced connectivity. Ontario is also developing the Artificial Intelligence Industrial Strategy, aimed at scaling Ontario-based AI firms, expanding access to sovereign compute and data resources, and promoting AI adoption across communities and businesses, while ensuring the necessary digital and energy capacity to remain competitive.

OCC Analysis

Amid the rapid acceleration of AI and global competition for digital infrastructure, the OCC welcomes this new strategy and the renewal of the Critical Technology Initiatives program, which align with the OCC’s call for coordinated, sector‑focused programs that boost commercialization and adoption by Ontario SMEs. As outlined in the OCC’s AI policy primer, the upcoming strategy should clearly link these investments to productivity outcomes and metrics through tax incentives, SME-focused adoption supports, sector-specific skills development, and accessible pathways for SMEs to leverage digital tools for business growth.

Agri-Food Competitiveness, Research & Innovation

Budget 2026 announced measures aimed at strengthening Ontario’s agri-food sector, investing nearly $50 million over the next three years into Agricultural Research and Innovation Ontario, to support its network of agri-food research infrastructure. It further adds $100 million to the Risk Management Program to help farmers manage uncontrollable risks.

OCC Analysis

Ontario’s agri-food sector faces growing pressures from extreme weather and climate volatility. The OCC welcomes increased funding for risk mitigation and investments in agricultural research, which support sustainable, homegrown farming technologies while protecting domestic food supply chains.

Qualified People, Diverse Talent

Postsecondary Education, Training, and Research

Budget 2026 announced various new measures to support workers facing economic disruption and strengthen Ontario’s talent pipeline. The government is investing $5.5 million in 2026–27 for the Women’s Economic Leadership and Legacy (WELL) Fund to create pathways for women to advance their careers and leadership roles. The Fund also supports Indigenous women and survivors of human trafficking to connect them to jobs in high-demand sectors.

The Ontario Government, over three years beginning in 2026-27, is committing $26 million in Ontario’s research and innovation capacity to support Ontario’s research institutes and an additional $117.1 million through the Ontario Research Fund-Research Infrastructure (ORF-RI) to build facilities across agri-food, critical minerals, information technology, life sciences and manufacturing. These initiatives aim to advance innovation while also building a skilled workforce critical to the province’s competitiveness. Ontario also announced $6 million over three years for Queen Elizabeth Scholars scholarships and $21.6 million to relaunch French-language courses at the Université de Sudbury in partnership with the University of Ottawa.

These efforts build on the province’s previous announcement of a new long-term funding model that will bring an additional $6.4 billion into the post-secondary education sector over four years, including increased operating funding, 70,000 more in-demand seats for small, rural, Northern, French-language colleges and universities and Indigenous Institutes, and an updated tuition framework.

OCC Analysis

The OCC welcomes these measures, particularly amid persistent labour shortages, tariff-related disruptions, and the need to stabilize Ontario’s workforce across sectors and regions. As a leading voice for long-term, stable funding for the post-secondary sector, the OCC commends strong investments in Ontario’s post-secondary education sector that enhance the talent pipeline, improve student outcomes, address labour market needs, and strengthen institutional capacity to invest in programs and technology and to build collaborative partnerships.

Additionally, the OCC welcomes commitments for Ontario’s research institutes and additional funding through the ORF-FI, critical strides towards advancing home-grown innovation and talent within the province. To fully maximize the benefits of these investments, the OCC urges the Government of Ontario to build stronger employer-informed training pathways (e.g., through work-integrated learning) and a coordinated long-term talent strategy to maintain a competitive and inclusive workforce.

Healthy and Sustainable Communities

Health Economy and Life Sciences

Budget 2026 includes an additional $24 million over three years to the Life Sciences Scale-Up Fund to help firms expand, compete, and grow in Ontario. The additional investment positions Ontario as a destination for research, development, and investment.

Budget 2026 also provides an additional $124.2 million over three years to expand 2,000 registered nurse and 1,000 practical nurse seats at publicly assisted colleges and universities, building on previously announced nursing education expansions.

To support broader patient care, the province is investing over $1.1 billion in additional hospital funding for 2026–27. This includes up to a 4 per cent increase in base and targeted hospital funding, to enhance high-quality care, accountability, system efficiency, and access to life-saving treatments. An additional $1.1 billion investment over three years will expand home care services and sustain the Hospital-to-Home (H2H) program.

Lastly, Budget 2026 includes $139.4 million in additional annual funding for high-quality, resident-centred and sustainable long-term care.

OCC Analysis

Ontario is a major Canadian hub for life sciences, home to over 2,000 life sciences companies, 1,300 medical device and medical technology firms, employing over 70,000 people. The OCC welcomes investments that help firms expand, commercialize, and compete globally. To maximize long-term impact, the province should strengthen commercialization pathways, scale up financing, and integrate with research, innovation, and procurement systems.

Building on previous government announcements, the OCC commends the Government of Ontario for investing in hospitals, long-term care homes, the health and human resources workforce, and advancing care closer to home, priorities consistently advocated for by the OCC. The OCC also supports the government’s prior investment in a new primary care medical record system, which enhances interoperability and better integrates hospitals, primary care, and community health services.

To fully realize the health system and economic benefits of these initiatives, the OCC encourages stronger alignment of workforce, innovation, and infrastructure strategies, including enhanced accountability in hospital and long-term care planning and expanded support for allied health professionals to practice at their fullest scope, especially in rural, northern, and Indigenous communities.

Supportive Housing & Community Well-Being

Budget 2026 commits nearly $53 million over three years to expand supportive housing initiatives and improve access to mental health services and housing supports. These investments will help build 425 supportive housing units, including at LOFT’s Bradford House and Indwell Community Homes across Ontario, and nearly 900 supportive housing units through the provincial rollout of the HART Hub model for those who are homeless or at risk of homelessness.

OCC Analysis

The OCC is supportive of these measures, recognizing the interrelated mental health, addictions, and homelessness crises, and the link to the need for supportive housing and mental health services to support broader economic participation.

With persistent strain on service delivery, ongoing workforce shortages, and inconsistencies with capital and operational funding for community-based mental health and addictions services, the OCC urges the Government of Ontario to build a whole-of-government approach to developing a continuum of care model, including investments in prevention, early intervention, crisis response, community safety and treatment across regions.

Growth-Enabling Infrastructure

Budget 2026 reinforces infrastructure as a driver of competitiveness and trade diversification, backed by a multi-year capital plan exceeding $200 billion over the next decade, including $37 billion in 2026-27, demonstrating a continued commitment to Ontario’s building agenda. It also confirmed the government’s intention to better connect its regions through the accelerated development of trade-enabling roads and airports.

Transit Infrastructure and Regional Connectivity

Budget 2026 provides an additional $15 million over three years, for a total of $30 million, through the Ontario Transit Investment Fund to expand rural transit, including new and expanded bus services, on-demand shared ride and door-to-door transportation options, to support greater accessibility.

It also confirms the intention to introduce legislation to assume the City’s role in the tripartite agreement governing Billy Bishop Toronto City Airport. This development paves the way for a modernized governance framework, enabling long-term planning, capacity expansion and investment for the airport.

OCC Analysis

The OCC has long called for continued investment in transportation infrastructure that enables the movement of goods and people in Ontario. The proposed changes to the governance of the Billy Bishop Toronto City Airport follow years of advocacy by the Ontario Chamber of Commerce in support of a modernized governance framework and hold significant potential to better connect Ontario’s financial capital to its regions and other provinces, furthering internal trade objectives. Integration with long-term transit and urban planning in the Toronto Waterfront district will be essential to success.

While additional transit funding is welcomed, the Province must ensure that strategic alignment translates into clearer execution and targeted investments in first- and last-mile connectivity.

Critical Minerals and Northern Infrastructure

Budget 2026 advances the development of strategic infrastructure in Northern Ontario by accelerating timelines for all-season roads in the Ring of Fire region, with construction expected to begin in 2026.

The province is also extending the Northern Ontario Resource Development Support Fund with a new ongoing investment of $15 million annually to help northern communities invest in core assets, access new economic opportunities through resource development, and mitigate the impacts of resource development on local infrastructure.

These actions augment a significant package of measures aimed at strengthening Ontario’s critical minerals advantage and building a more integrated domestic supply chain. The government is advancing a modernized critical minerals strategy, Fortifying Ontario’s Economy: A Plan to Accelerate Responsible Resource Development, with a focus on planning for growth, building a future-ready workforce, delivering faster permitting, supporting exploration, strengthening Indigenous partnerships, and scaling up innovation, global capital attraction, and domestic supply chains.

In addition, the province is investing an additional $30 million over the next three years in the Ontario Junior Exploration Program to support early-stage mineral exploration, building on prior commitments and leveraging private-sector investment in high-risk projects. The Budget further highlights continued support through the Critical Minerals Innovation Fund, including more than $7 million invested in July 2025 for a new intake supporting research, development, and commercialization of made-in-Ontario mining technologies across areas such as battery supply chains, deep exploration, mineral recovery, and related innovation priorities.

OCC Analysis

Accelerating timelines for enabling infrastructure in the Ring of Fire represents an important step towards unlocking Ontario’s role in global supply chains and supporting Indigenous economic participation. Investments into the Ontario Junior Exploration Program underscore the capital-intensive nature of early-stage exploration; however, as outlined in Mining 2030: Unearthing Ontario’s Potential, the targeted program does not provide the predictable, stackable support available in other provinces. Building on recent government actions, including the introduction of the One Project, One Process framework, the OCC emphasizes the importance of expanding these efforts more broadly across the mining sector to ensure consistent, predictable, and timely approvals.

Energy Infrastructure

Despite a few new energy measures, Budget 2026 reinforces Ontario’s recent efforts to expand generation and transmission capacity, positioning energy infrastructure as a critical enabler of long-term economic growth. The Budget provides a consolidated update on several recent transmission infrastructure developments announced in early 2026, including the acceleration of the Barrie to Sudbury Transmission Line and the approval of Ontario’s first underwater high-voltage transmission line from near Darlington to downtown Toronto, with a capacity of up to 900 MW. Together, these updates signal progress toward grid reliability, expanded transmission capacity to support future demand, and the delivery of clean, reliable power to Northern regions, while prioritizing economic reconciliation.

OCC Analysis

The OCC welcomes continued efforts to expand Ontario’s energy supply and transmission capacity, particularly as electricity demand rises, and the province seeks to support industrial growth, electrification, and investment attraction.

At the same time, electricity affordability and price predictability remain top of mind for businesses, particularly as geopolitical events create upward pressures on energy costs. Specific measures to contain rising electricity rates will be important to ensure the system can effectively support Ontario’s future industrial and investment needs.

Housing Supply & Enabling Infrastructure

Budget 2026 includes several measures to support housing supply, improve affordability, and enable the infrastructure needed to build more homes. The government continues to support housing development by building on previously announced measures, including the proposed removal of the full eight per cent provincial portion of the Harmonized Sales Tax (HST) for the New Housing Rebate and New Residential Rental Property Rebate on qualifying new homes valued up to $1 million, with relief phased for higher-value homes, and on qualifying purpose-built rental housing. The Budget also highlights modular housing partnerships with the City of Toronto and Ottawa, in which 33 modular homes are being built for each project.

The Budget also strengthens housing-enabling infrastructure by increasing funding for the Municipal Housing Infrastructure Program (MHIP) – Health and Safety Water Stream, with an additional $700 million, bringing the total program funding to $875 million. In addition, through the Building Ontario Fund, the province is investing up to $300 million with High Art Capital to alleviate rental housing pressures in the Greater Toronto Area (GTA) by converting 2,200 newly built condominium units into long-term rental housing; a $133.6 million investment with Arch Corporation to create 570 new and redeveloped beds in four long-term care homes; and an $83 million investment in the first phase of an affordable student housing development at Toronto Metropolitan University.

OCC Analysis

The OCC supports these measures, particularly given ongoing housing affordability pressures, infrastructure constraints, and the need to accelerate housing delivery across Ontario. These investments will support integral rental construction, reduce barriers to new supply, and strengthen housing-enabling infrastructure – all of which are needed to promote long-term economic growth. At the same time, continued uncertainty around construction timelines and municipal implementation capacity may affect how quickly these commitments translate into meaningful results. The OCC has emphasized the need for coordinated housing and infrastructure planning, faster approvals, and long-term policy certainty that supports both homebuilding and growth-enabling municipal infrastructure.

Ontario’s Fiscal Outlook

Budget 2026 adopts an expansionary yet measured fiscal approach, pairing near-term economic support with a disciplined medium-term path back to balance. Slower economic growth, trade-related disruptions, and heightened geopolitical uncertainty have weakened the outlook, underscoring the need for a strategy that both stimulates economic activity and protects Ontario’s economic resilience through targeted investments and support measures.

The budget presents another historically significant spending plan, with total expenses projected at $244.2 billion in 2026-27, supported by projected revenues of $231.9 billion. Encouragingly, the 2025-26 deficit has improved by $2.3 billion relative to last year’s budget projections, largely reflecting stronger-than-expected revenues and the use of reserve funds.

For 2026-27, the projected deficit stands at $13.8 billion, with net debt projected to reach 37.7 per cent of GDP. While the fiscal framework outlines a return to surplus by 2028-29, the persistence of deficits, an elevated net-debt-to-GDP ratio, and rising interest and debt-servicing costs point to an increasing debt burden. These pressures risk reducing fiscal flexibility and constraining the government’s capacity to respond to future economic shocks.

Fiscal results continue to reflect challenging economic conditions. The province faces a slowing economy, with real GDP growth forecast at 1 per cent in 2026 (well below pre-tariff expectations of 2.2 per cent), alongside modest employment growth of 0.5 per cent and an unemployment rate exceeding 7 per cent.

Despite the difficult economic backdrop and ongoing deficit, fiscal balance is not solely a matter of spending restraint versus expansion, but of spending quality. Well-designed, temporary deficits that support high-return investments – such as infrastructure, productivity-enhancing initiatives, business incentives, and investment attraction – can strengthen long-term economic performance and lay the foundation for lasting, sustainable growth.

The OCC welcomes a fiscal plan that balances near-term economic support with a credible commitment to medium-term fiscal sustainability. Continued emphasis on private-sector-led growth and investments with strong economic returns will be critical. Targeted spending in priority areas, including productivity growth, regulatory modernization, workforce development, critical infrastructure, and public services, will be key to supporting a more resilient and competitive provincial economy.

What’s Missing

Budget 2026 includes meaningful tax relief and targeted investments to support business growth, alongside a fiscal approach focused on stability amid continued global economic uncertainty. Nonetheless, there are several areas where additional government focus is required.

While the Budget advances several infrastructure priorities, there has been no reported progress on broadband expansion and closing the digital divide. The OCC has emphasized the importance of improving access, reliability, and speed of broadband services, particularly in rural, northern, and underserved communities. Continued focus on aligning broadband deployment with broader infrastructure planning and economic development strategies will be important to ensure equitable access across the province.

A reliable, affordable, and sustainable energy system is vital to Ontario’s long-term competitiveness. While Budget 2026 reiterates a commitment to expanding energy supply and transmission infrastructure, it falls short in addressing electricity affordability, price stability, and volatility. Gaps include the absence of new cost-mitigation tools for consumers and businesses, a lack of comprehensive support for electric vehicle (EV) adoption and charging networks, and limited progress on integrated infrastructure planning and regulatory streamlining.

The Budget also does not introduce dedicated measures to accelerate climate adaptation and resilience. Targeted investments in climate-resilient infrastructure and support to help businesses manage transition costs will be increasingly important as extreme weather risks grow.

Ontario’s newly announced investments in postsecondary education and research are a significant step toward building a more sustainable system that supports the province’s long-term competitiveness. Greater emphasis is needed on work-integrated learning, micro-credentials, and rapid reskilling, developed in collaboration with post-secondary institutions and tailored to SMEs and high-demand sectors. This should be complemented by a clearer talent strategy, including more targeted immigration pathways such as an enhanced Ontario Immigrant Nominee Program.

Opportunities to support business succession and ownership transition are notably absent. Developing an employee ownership policy framework aligned with recent federal measures would help reduce barriers, promote awareness, and support business continuity, especially for SMEs facing demographic and succession pressures.

Overall, while Budget 2026 includes targeted investments in infrastructure, such as housing, social services, and health care, it does not address the underlying fiscal pressures facing municipalities that limit their ability to deliver and sustain these priorities. The OCC continues to call for a comprehensive review of the municipal-provincial fiscal relationship, with a focus on reducing reliance on the property tax base to fund services such as supportive housing, homelessness response, and community safety. More stable and predictable municipal funding tools are needed to ensure provincial investments translate into long-term outcomes.

Finally, while recent investments signal recognition of Ontario’s arts, culture and tourism sectors, there remains an opportunity to better position these sectors as critical economic infrastructure. A more coordinated provincial strategy, focused on workforce development, regional economic growth, and improved market access, would help unlock their full potential as drivers of investment and community vitality.

For more details, refer to the Ontario Chamber of Commerce’s 2026 Provincial Budget Submission.