Taxation Transparency Report, 2026

Tax expenditure reporting is an important element of fiscal accountability. It increases fiscal transparency by providing a comprehensive picture of forgone revenue in the tax system. As required under the Fiscal Sustainability, Transparency and Accountability Act, 2019, the Minister of Finance is releasing information about the estimated cost of expenditures made through the tax system.

Structure of the Report

This report provides the most current estimates of tax expenditures under the following:

• Personal Income Tax;
• Corporate Income Tax;
• Sales and Commodity Taxes;
• Education Property Tax;
• Employer Health Tax;
• Mining Tax;
• Estate Administration Tax; and
• Gross Revenue Charge.

Descriptions of the tax provisions listed in this report are available at:

http://ontario.budget.ca/2026/fallstatement/provisions.html

Scope

Given the absence of a universally accepted definition of a “tax expenditure,” this report continues the approach adopted in previous reports of listing estimates of forgone revenue that could potentially be included under a broad-based tax system. This includes support the government provides to Ontario individuals, families and businesses through the tax system.

This report includes:

• Provincial tax reductions and exemptions administered by the Ontario government or Ontario’s municipalities;
• Tax expenditures that are shared with the federal government under income tax and sales tax administration agreements; and
• Ontario-only tax expenditures administered by the federal government under those agreements.

Under the tax administration agreements, the federal government determines the tax bases for the Personal Income Tax (PIT), Corporate Income Tax (CIT) and Harmonized Sales Tax (HST). As a result, Ontario parallels federal tax expenditures associated with these tax bases. The agreements allow Ontario to implement certain Ontario-only measures that the federal government administers for the provincial government.

This report does not include tax provisions for which estimates are not available. Also not included in this report are measures that were repealed, phased out in the calendar year or those that are reported as expenses in the Public Accounts of Ontario. Examples of provisions reported as expenses include the Northern Ontario Energy Credit, the Ontario Political Contribution Tax Credit, the Ontario Innovation Tax Credit, Ontario Fertility Treatment Tax Credit and the Ontario Childcare Access and Relief from Expenses (CARE) Tax Credit.

Method

This report is intended to facilitate analysis of tax expenditures and indicate their role within the tax system. The estimates provided in the report cover the years 2023 to 2026 and include both updated historical estimates and forecasts based on the latest available data. While estimates for the tax expenditures for 2023, 2024 and 2025 were previously published, they have been revised in 2026 to facilitate meaningful comparison of results over time and to better inform Ontario taxpayers and legislators about expenditures through the tax system. In addition, this new format better aligns with the number of years presented in the fiscal tables detailing total revenue and total expenses in the 2026 Ontario Budget and the 2026 Ontario Economic Outlook and Fiscal Review.

The estimates in this report were developed using the latest available taxation and economic data, forecast to the 2026 calendar year, and revised for prior years where new data are available. The data used to estimate the values of the tax provisions come from a variety of sources. In addition, the estimated value of a tax provision may differ from the amount reported in a prior year for a variety of reasons, including amendments to the provision, changes in economic factors, revisions to the underlying data or improvements to the estimation method. Some tax provision estimates are particularly sensitive to economic conditions or other variables and, therefore, can fluctuate significantly from year to year.

Unless otherwise noted, each estimate is presented on a full-year basis, which includes the full-year impact of tax provisions that took effect within the year. This approach enables a better comparison of the revenue forgone from measures that come into effect at different times in the year.

It is important to note that each estimate in this report has been determined separately and only estimates forgone revenue for the year. Due to the possible interaction between tax measures, caution must be applied in adding estimates together to determine the total cost of a group of tax expenditures.

Tax expenditure estimates below $10 million are rounded to the nearest $1 million, and estimates above $10 million are rounded to the nearest $5 million. However, tax expenditure estimates of less than $1 million are denoted by the letter “s” (small). A “–” indicates that the provision is not in effect.

Personal Income Tax

Tables 1, 2 and 3 provide estimates of tax provisions relating to Ontario’s Personal Income Tax. Business provisions listed here are for unincorporated businesses.

Corporate Income Tax

Estimates of tax provisions relating to the Ontario Corporate Income Tax system are presented in Tables 4 and 5.

Corporate Income Tax — Description of Changes to Tax Provisions

The following Corporate Income Tax provisions have changed since the Taxation Transparency Report, 2025.

Ontario Small Business Deduction — As announced in the 2026 Ontario Budget, the small business Corporate Income Tax rate was reduced to 2.2 per cent from 3.2 per cent, effective July 1, 2026. The tax rate reduction is pro-rated for taxation years straddling July 1, 2026. Only the partial-year estimated impacts related to this change are included in the 2026 estimates for the Ontario Small Business Deduction.

Ontario Credit Union Tax Reduction — The reduction in the small business Corporate Income Tax rate to 2.2 per cent from 3.2 per cent effective July 1, 2026, also applies to the Ontario Credit Union Tax Reduction. As of July 1, 2026, credit unions are eligible for the reduced rate of 2.2 per cent on taxable income in excess of the income eligible for the Ontario small business deduction. Only the partial year estimated impacts related to this change are included in the 2026 estimates for the Ontario Credit Union Tax Reduction.

Ontario Research and Development Tax Credit — The federal government restored the eligibility of capital expenditures for the federal Scientific Research and Experimental Development program, which impacts the estimates for the Ontario Research and Development Tax Credit. The expansion includes allowing capital expenditures on property acquired on or after December 16, 2024. The estimated impacts related to this federal change are included in the Ontario Research and Development Tax Credit 2024, 2025 and 2026 estimates.

Sales and Commodity Taxes

Sales Tax

Estimates of tax provisions relating to sales taxes, including the Harmonized Sales Tax and Retail Sales Tax, are presented in Tables 6, 7 and 8.

Sales Tax — Description of Changes to Tax Provisions

The following Sales Tax provisions have changed or been introduced since the Taxation Transparency Report, 2025.

Ontario First-Time Home Buyers’ Rebate — Builders or purchasers of newly constructed and substantially renovated homes who qualify for the Ontario New Housing Rebate and who are eligible first-time home buyers may be entitled to a rebate of up to 100 per cent of the provincial portion of the HST payable on homes valued up to $1 million. This rebate follows the eligibility criteria of the federal first-time home buyers’ GST/HST rebate. The rebate is generally available for agreements of purchase and sale entered into with the builder on or after March 20, 2025 and before 2031.

Ontario New Housing Rebate (including New Residential Rental Housing and Enhanced Rebates) — Temporary relief under the Enhanced New Housing Rebate or Enhanced New Residential Rental Property Rebate is available for builders or purchasers of newly constructed and substantially renovated homes who meet specific timing criteria. These rebates provide relief on up to 100 per cent of the provincial portion of the HST payable on homes valued up to $1 million. The enhanced rebates are generally available for agreements of purchase and sale entered into with the builder on or after April 1, 2026 and on or before March 31, 2027.

Commodity Tax

Estimates of tax provisions relating to commodity taxes, including the Fuel Tax; Gasoline Tax; Land Transfer Tax; Tobacco Tax; and Beer, Wine and Spirits Taxes are presented in Tables 9, 10, 11, 12 and 13.

Beer, Wine and Spirits Taxes — Description of Changes to Tax Provisions

The following Beer, Wine and Spirits Tax provisions have changed or been introduced since the Taxation Transparency Report, 2025.

As announced in the 2026 Budget, the government consolidated legacy taxes into simplified single rates to reduce administrative complexity and provide additional tax relief on beer, wine and spirits products sold through producer stores.

Effective April 1, 2026, the government combined the basic, volumetric and environmental taxes into:

• a single tax rate of $1.18 per litre for non-draft and $0.90 per litre for draft beer made by a beer manufacturer, and $0.46 per litre for non-draft and $0.36 per litre for draft beer made by a microbrewer;
• a single tax rate of 0 per cent on purchases of Ontario wines and wine coolers and 19.1 per cent on purchases of non-Ontario wines and wine coolers sold through on-site winery retail stores; and a single rate of 12 per cent on purchases of owner wines and wine coolers sold through off-site winery retail stores; and
• a single basic tax rate of 20 per cent on purchases of spirits with an alcohol by volume (ABV) content of 7.1 per cent or less; 25 per cent on purchases of spirits with an ABV content greater than 7.1 per cent and up to 18 per cent; and 30.75 per cent on purchases of sprits with an ABV content greater than 18 per cent.

Education Property Tax

Table 14 provides estimates of tax provisions relating to the Education Property Tax system.

Employer Health Tax

Table 15 provides an estimate of a tax provision relating to the Employer Health Tax.

Mining Tax

Estimates of tax provisions relating to the Ontario Mining Tax system are presented in Table 16.

Estate Administration Tax

Table 17 provides an estimate of a tax provision relating to the Estate Administration Tax.

Gross Revenue Charge

Table 18 provides an estimate of the tax holiday under the Gross Revenue Charge.