The Ontario government on Thursday tabled a budget focused on developing a resilient economy amid geopolitical uncertainty.
The state expects to end the current fiscal year with a $12.3 billion deficit, lower than the $14.6 billion projected in last year’s budget. The projected deficit for 2026-2027 is $13.8 billion, a significant increase from the previous forecast of $7.8 billion.
The state’s net debt is currently projected to be $485 billion from 2026 to 2027.
The main points are:
Tax reduction for small and medium-sized businesses
The budget proposal proposes a 30% reduction in corporate tax for small and medium-sized enterprises, reducing the current tax rate of 3.2% to 2.2% from July 1st.
The government says this will benefit more than 375,000 small businesses across the state, and eligible businesses can save up to $5,000 a year.
The government also intends to lower capital investment costs by allowing immediate 100% write-off of various expenditures, including research and development, manufacturing machinery and buildings.
The state says these measures will provide more than $3.5 billion in tax cuts to businesses over four years.
medical funding
The budget allocates more than $1.1 billion in new funding for hospitals, which the government says will help deliver quality care and system efficiency. That’s more than $1 billion less than what the Ontario Hospital Association says the province’s overburdened hospital sector needs.
The state also plans to spend $1.1 billion over three years to expand home and community health services provided by nurses, personal support workers and therapists.
The government is also proposing $186 million in new funding for the Ontario Autism Program, bringing its total budget to $965 million. The budget says the new investment will help more children access clinical services for autism care.
housing start-down
The draft budget states that the forecast for housing starts in 2026 is 64,800 units, about 10,000 fewer units than projected in the 2025 budget.
The government said plans announced ahead of the budget to temporarily expand the HST rebate on new home purchases would spur an additional 8,000 housing starts.
Ontario has steadily lowered its forecast for new home construction levels, with the finance minister admitting last year that the government’s goal of building 1.5 million homes over 10 years had become a “soft” goal.
Research and Innovation Fund
The budget proposes a number of new investments in life sciences and agri-food research, as well as the development of artificial intelligence and quantum technology.
For example, we are allocating $107 million over three years to accelerate the development of critical technologies such as AI, quantum technology, robotics, and defense manufacturing.
It will also allocate $24 million over three years to a fund to support companies in the life sciences sector, including medical isotopes.
Protection of certain pension benefits
The budget proposes increases to the Pension Benefit Guarantee Fund, which protects participants and beneficiaries of certain single-employer defined benefit pension plans in the event of employer bankruptcy.
The fund currently guarantees the first $1,500 of monthly pension benefits in the event of bankruptcy or pension plan shortfall. The government is proposing to double the guarantee limit to $3,000 per month, which it says would be the biggest increase since the fund was created in 1980.
LCBO revenue decline
The Ontario Liquor Control Board is expected to have a net profit of about $1.9 billion, according to the proposed budget, down from about $2.3 billion projected in last year’s fiscal update.
Officials say the downward trend primarily reflects lower alcohol price increases, increased support programs for local producers, and changing consumer preferences.
A recent Statistics Canada report found that people across the country are buying less alcohol, leading to a significant drop in liquor revenue for provincial and federal governments.
This report by The Canadian Press was first published March 26, 2026.
Kathryn Manney, Canadian Press
