2026 Federal Spring Economic Update

On April 28, 2026, Canada’s Minister of Finance, François-Philippe Champagne, presented the federal government’s 2026 Spring Economic Update. We have summarized selected highlights of the personal and business tax measures and their potential impact on Canadians and Canadian businesses.

Personal Income Tax Measures

• Canada Strong Fund: The government is introducing Canada’s first national sovereign wealth fund to invest in key strategic Canadian projects and companies. Canadians will have the opportunity to invest in the fund and share in the financial returns generated by the projects. The government will initially provide a $25 billion endowment over three years. A Canada Strong Fund transition office will be created to provide further details going forward.
• Lowering of Canada Pension Plan Rate: The government will reduce the contribution rate for the base Canada Pension Plan from 9.9% to 9.5%, effective January 1, 2027. This will result in annual savings of about $133 for an employee earning $70,000 a year, with equivalent savings for their employer.
• Employee Ownership Trust Tax Exemption: The 2026 Spring Economic Update proposes to make the Employee Ownership Trust Tax Exemption permanent. This measure provides an exemption from taxation on up to $10 million in capital gains realized on the sale of a business to an employee ownership trust or worker cooperative corporation on a permanent basis.
• Home Buyers’ Plan: The government is extending the five-year grace period for participants making a first withdrawal up to the end of 2028. This would allow the 15-year repayment period to start the fifth year following the year in which a first withdrawal was made.
• Labour Mobility Deduction for Tradespeople: The Spring Economic Update 2026 proposes to increase the eligible temporary relocation expense limit that can be deducted in a year from $4,000 to $10,000 in 2026. The limit will be indexed annually thereafter and modified to allow the distance rule for temporary lodging to be at least 120 kilometres closer to each temporary work location than the taxpayer's ordinary residence. The measure would apply to the 2026 and subsequent taxation years.
• Streamlining Disability Tax Credit (DTC): Proposed changes would allow provincial or territorial public guardians, trustees, and curators to certify on the DTC application form, for an adult under their care for property matters, that the individual has a valid certificate of incapacity issued by a healthcare professional in accordance with applicable provincial or territorial laws for determining decision-making capacity. A qualified medical practitioner would no longer be required to certify the individual's impairment for their DTC application when such a certification is provided. This would apply to DTC certifications issued for the 2026 and future taxation years.

Other Tax Measures

• Temporarily Pausing Fuel Excise Tax: To help Canadians deal with rising fuel prices, the Government of Canada recently announced a temporary suspension of the federal fuel excise tax on gasoline, diesel, and aviation fuels. The federal tax rates were set to zero cents per litre, effective April 20, 2026, and will continue until and including Labour Day, September 7, 2026. This measure is expected to reduce fuel prices by 10 cents per litre on regular gasoline and 4 cents on diesel.
• Canada Groceries and Essentials Benefit: Formerly the Goods and Services Tax (GST) Credit, the new Canada Groceries and Essentials Benefit will allow an eligible family of four to receive up to $1,890 this year and about $1,400 a year for the next four years. An eligible single person can receive up to $950 this year, and about $700 a year for the next four years.

Business Income Tax Measures

• Investment Tax Credit for Carbon Capture, Utilization, and Storage (CCUS): The Spring Economic Update 2026 proposes that Enhanced Oil Recovery (EOR) be made an eligible use for the purposes of the CCUS tax credit. The Existing CCUS tax credit rules would apply, along with the following specific changes for EOR projects.
• Accelerated Capital Cost Allowance Rates for Low-Carbon Liquified Natural Gas Facilities: The Federal Budget 2025 proposed to reinstate accelerated capital cost allowances (CCAs) for eligible liquefied natural gas (LNG) equipment and related buildings for low-carbon LNG facilities. The Spring Economic Update 2026 proposes the implementation details for this measure. The accelerated CCA rates are available for eligible assets acquired on or after November 4, 2025, and up to the end of 2034.

Previously Announced Measures

• The 2026 Spring Economic Update confirms the government's intention to proceed with several previously announced tax and related measures, as modified to take into account consultations and deliberations since their release.
  Refer to the Spring Economic Update 2026 for further details.

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