TORONTO, The Ontario government has announced a proposed $8 billion business tax relief initiative aimed at attracting capital investment, strengthening economic competitiveness and supporting the creation of 30,000 jobs across the province over the coming years.
The Ontario Competitiveness Tax Cut, introduced as part of the province’s multi-year Tax Action Plan, would allow eligible businesses to immediately write off 100 per cent of the value of a broad range of capital investments.
The initiative is designed to reduce business costs and encourage economic expansion as Ontario faces continued uncertainty surrounding U.S. tariffs and international trade conditions.
According to provincial estimates, the proposed measures could generate at least $11 billion in additional capital investment and contribute approximately $6 billion to Ontario’s gross domestic product (GDP).
Ontario Business Tax Relief Targets Investment and Economic Growth
The proposed tax changes would complement the federal government’s Productivity Mega Deduction, allowing businesses to deduct qualifying capital expenditures immediately rather than spreading deductions over several years.
Eligible investments would include machinery, industrial equipment, software, fibre-optic cables, aircraft, certain vehicles, patents, railway tracks, bridges and roads.
The provincial measures would take effect following the passage of the necessary federal legislation.
Ontario Finance Minister Peter Bethlenfalvy said the initiative would help businesses manage economic pressures while maintaining their international competitiveness.
“In the face of U.S. tariffs, our government is helping Ontario businesses invest, grow and remain competitive on the global stage by lowering the cost of investing and doing business,” said Peter Bethlenfalvy, Minister of Finance. “The Ontario Competitiveness Tax Cut will be a gamechanger for business investment in the province, supporting 30,000 new jobs as we continue working to make Ontario the most competitive business environment in the G7.”
The government estimates that the new measure would provide more than $8 billion in additional provincial tax relief over five years.
Ontario’s Corporate Investment Tax Rate Could Fall to 3.6 Per Cent
A central component of the proposal is its projected impact on Ontario’s marginal effective tax rate (METR), which measures the overall tax burden on new business investment.
The government estimates that the immediate writeoff provisions would reduce Ontario’s METR by 6.1 percentage points, bringing it to approximately 3.6 per cent when combined with previously announced measures.
That would place Ontario below the comparative rates reported by the federal Department of Finance for major international economies.
The United States has an average METR of 16.9 per cent, compared with 19.0 per cent across Organisation for Economic Co-operation and Development countries and 26.0 per cent among G7 economies.
These figures reflect the tax treatment of new investment rather than the statutory corporate income tax rate.
More Than $12 Billion in Business Investment Tax Relief Planned
When combined with accelerated depreciation and writeoff provisions included in Ontario’s 2026 Budget, the proposed Competitiveness Tax Cut would increase total provincial tax relief supporting business investment to more than $12 billion over five years.
The initiative builds on tax measures introduced since 2018 and expanded through the province’s Tax Action Plan, launched in 2025.
Among those measures is a Small Business Tax Cut included in Budget 2026, which the government says will provide $1.1 billion in savings over three years.
More than 375,000 small businesses are expected to benefit, with potential annual savings of up to $5,000 per eligible business.
Ontario Highlights $235 Billion in Investment Since 2018
The province reports that Ontario has attracted more than $235 billion in domestic and international business investment since 2018.
Government estimates indicate that existing economic measures would deliver approximately $10.2 billion in business cost savings and support during 2026, including $4.8 billion directed toward small businesses.
Beyond tax reductions, the province is pursuing regulatory changes intended to accelerate permitting approvals, reduce administrative requirements and lower operating costs for businesses.
These initiatives are intended to strengthen Ontario’s position as an investment destination amid trade uncertainty and growing competition for industrial development.
Ontario Fall Economic Statement Expected October 29
The government is expected to provide further details on its economic competitiveness strategy in the 2026 Fall Economic Statement, scheduled for release on October 29.
The update is expected to outline additional progress on business investment, regulatory modernization and measures intended to protect Ontario’s economy from external trade pressures.
While the projected employment, investment and GDP benefits remain government estimates, the proposed tax changes represent a significant component of Ontario’s broader strategy to encourage private-sector expansion and strengthen long-term economic resilience.
The ultimate economic impact will depend on legislative implementation, business investment decisions and broader market conditions.
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