Ontario’s 2025 Budget – “A Plan to Protect Ontario” – was tabled on May 15, 2025, by Finance Minister Peter Bethlenfalvy. In response to economic headwinds (notably U.S. tariffs), the government largely held personal and corporate tax rates steady. Instead, the Budget introduced targeted relief measures for families and businesses. Below, we summarize the individual income tax updates, corporate tax changes, and new tax credits and incentives that will affect Ontario taxpayers and businesses.
Personal Tax Changes in Ontario Budget 2025
Affordable Housing Measures – To help combat Ontario’s housing shortage, municipalities will have the option of reducing property tax rates by up to 35%. This measure is proposed to begin in 2026 and will apply to eligible rental housing units. Qualifying new rental housing will also benefit from the elimination of HST.
Gas and Fuel Tax Measures – Ontario Budget 2025 proposes legislation to keep the gasoline and diesel tax rates at 9.0 cents per litre. These reductions, initially introduced on July 1, 2022, and set to expire on June 30, 2025, would be made permanent to provide ongoing relief to Ontario residents and businesses. Tax on propane used in licensed road vehicles may also be eliminated, effective July 1, 2025.
Ontario Fertility Treatment Tax Credit (OFTTC) – A refundable tax credit has been introduced for fertility-related medical expenses. Starting in 2025, families can claim 25% of eligible fertility expenses, such as in vitro fertilization (IVF), medications, diagnostic tests, and embryo freezing. There will be a $20,000 cap, which equates to a maximum annual credit of $5,000 per year.
Business Tax Updates in Ontario Budget 2025
Provincial Tax Payment Deferral – To aid cash flow amid economic uncertainty, qualifying Ontario businesses can defer certain provincially administered tax payments, such as Employer Health Tax, Gasoline Tax, and Insurance Premium Tax, for six months from April 1 to October 1, 2025. This measure aims to provide up to $9 billion in liquidity relief. Businesses must still file returns on time, but payments can be postponed without penalty or interest.
Protecting Ontario Account (POA) – In response to the economic challenges posed by U.S. tariffs, the 2025 Ontario Budget introduced the Protecting Ontario Account (POA). This initiative establishes a fund of up to $5 billion to provide immediate and long-term support to businesses that have been significantly impacted by trade disruptions. The POA is designed to offer emergency liquidity relief for companies that have exhausted other funding avenues, helping them maintain operations and protect jobs. An initial $1 billion is allocated for immediate assistance, with an additional $4 billion reserved for future relief efforts as needed.
Trade-Impacted Communities Program (TICP) – As a complementary measure to the POA, Ontario Budget 2025 proposed the TICP, which allocates an additional $40 million in grants to municipalities and industries disproportionately affected by trade disruptions. These funds are intended to assist in economic recovery and adaptation at the community level.
Ontario Made Manufacturing Investment Tax Credit (OMMITC) Enhancement – Ontario Budget 2025 proposes a temporary increase to the OMMITC from 10% to 15% for CCPCs investing in eligible manufacturing and processing equipment or buildings. This enhancement would be available for qualifying investments made between May 15, 2025, and the end of 2029. The Budget also proposes extending the OMMITC to non-CCPCs to help spur provincial manufacturing efforts and make Ontario more attractive for foreign investment.
Workplace Safety and Insurance Board (WSIB) Premium Reduction – As part of the 2025 Ontario Budget, the WSIB announced a reduction in the average premium rate for Ontario businesses. Effective January 1, 2025, the average premium rate has been decreased from $1.30 to $1.25 per $100 of insurable payroll, the lowest rate in over 50 years. This reduction is expected to save Ontario businesses approximately $150 million annually.
Ontario Shortline Railway Investment Tax Credit (OSRITC) – A new 50% refundable corporate tax credit was proposed for capital and labour costs related to shortline railway track maintenance and rehabilitation. The OSRITC would be applicable from May 15, 2025, to December 31, 2029, with a cap of $8,500 per mile of track per year. According to government estimates, this credit will provide approximately $23 million of tax support to Ontario’s shortline rail industry over three years.
Final Thoughts
The overarching theme of the 2025 Ontario Budget is support and stability, with a focus on targeted credits and cash-flow relief rather than broad tax cuts. For small business owners and corporations, Ontario’s tax environment remains stable with no rate changes. However, several measures proposed in the Budget could provide significant benefits for Ontario-based companies. In particular, businesses should closely monitor updates regarding provincial tax payment deferral and the enhancements to the Ontario Made Manufacturing Investment Tax Credit.
This article was written by the NVS Professional Corporation team, your knowledgeable Barrie and Markham accountants. The content is intended as a general guide for informational purposes only. For specialist advice tailored to your specific situation, please reach out to our expert team.
