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Corporate Tax Rates and Legislation: Q4 2025 Accounting Status

January 06, 2026

Issue 4 – Q4 2025 Accounting Status

Legislative changes — October 1, 2025 to December 31, 2025

Legislative developments from October 1 to December 31, 2025, that affect income taxes, are outlined below.

2025 Federal budget

The federal government’s November 4, 2025 budget does not change general or manufacturing and processing (M&P) corporate income tax rates. Key federal budget tax measures:

  • provide immediate expensing (i.e. a 100% first-year capital cost allowance [CCA] deduction) for the cost of acquiring, or making additions or alterations to, eligible buildings acquired after November 3, 2025 and first used for M&P before 2030 (phased out 2030 to 2033 and eliminated after 2033)
  • increase the annual scientific research and experimental development (SR&ED) expenditure limit, under which certain corporations are entitled to earn an enhanced 35% refundable investment tax credit (ITC), to $6 million, retroactive to taxation years beginning after December 15, 2024, and confirm that changes to the SR&ED tax incentive program previously announced in the 2024 Fall Economic Statement (FES) that expand SR&ED ITC refundability and restore SR&ED eligibility for capital expenditures will proceed (see our Tax Insights “SR&ED updates: Enhanced credits, expanded eligibility and emerging opportunities”)
  • expand the list of critical minerals eligible for the critical mineral exploration tax credit and the clean technology manufacturing ITC, and extend the availability of full ITC rates for carbon capture, utilization and storage expenditures by five years (to the end of 2035)
  • significantly change Canada’s transfer pricing rules, effective for taxation years that begin after November 4, 2025 (see our Tax Insights “Bill C-15: Significant changes proposed to Canada’s transfer pricing rules”)

For more information, see our Tax Insights “2025 Federal Budget: Investing in Canada’s future.” 

Status: As at December 31, 2025, all of these key federal budget tax measures (except for the immediate expensing of M&P buildings) are included in Bill C-15 (see below), which was introduced in the House of Commons on November 18, 2025 (see Table 1 below for Bill C-15’s status), but none of the federal budget measures are considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Federal Bill C-15 (2025 federal budget and other measures)

Federal Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025, which includes the Notice of Ways and Means Motion tabled on November 17, 2025, received first reading on November 18, 2025. Bill C-15 implements:

  • the key 2025 federal budget measures discussed above (except for the immediate expensing of M&P buildings), and includes the enhancements to the SR&ED tax incentive program announced in the federal 2024 FES 
  • many federal 2024 FES and budget and other measures — other key tax measures in Bill C-15:
    • implement (or reinstate) various accelerated CCA measures (i.e. reinstating the Accelerated Investment Incentive on eligible depreciable property and immediate expensing for eligible M&P and specified clean energy equipment and zero-emission vehicles; introducing an accelerated CCA of 10% for new eligible purpose-built rental projects and immediate expensing for CCA class 44, 46 and 50 property)   
    • enhance the clean technology and clean technology manufacturing ITCs and introduce the clean electricity ITC
    • allow the Canada Revenue Agency to waive the withholding requirement, over a specified period, for payments to a non-resident service provider (i.e. the Regulation 105 withholding requirement) if certain conditions are met, upon royal assent of the enacting legislation
    • repeal the Digital Services Tax Act as of June 20, 2024 (the date of original enactment) 

For more information, see our Tax Insights “Bill C-15 implements SR&ED, capital cost allowance and transfer pricing changes and more.” 

Status: As at December 31, 2025, Bill C-15 is not considered substantively enacted for Canadian GAAP or enacted for US GAAP (see Table 1 below). 

Quebec Information Bulletin 2025-6

On October 10, 2025, Quebec’s Ministère des Finances released Information Bulletin 2025-6 “Adjustments to certain fiscal measures and harmonization with various federal fiscal measures regarding sales taxes.” Information Bulletin 2025-6 includes information that clarifies certain aspects of Quebec’s tax credit for research and development (R&D), innovation and pre-commercialization, specifically the nature of pre-commercialization activities.

Status: Legislation to implement Quebec’s tax credit for R&D, innovation and pre-commercialization is included in Bill 6 (see Table 1 below) and is considered substantively enacted for Canadian GAAP as of November 11, 2025 and enacted for US GAAP as of December 12, 2025.

Quebec Information Bulletin 2025-8

On November 25, 2025, Quebec’s Ministère des Finances released Information Bulletin 2025-8 “Fiscal measures announced in the Update on Québec’s Economic and Financial Situation and other measures.” For more information, see our Tax Insights “Update on Québec’s Economic and Financial Situation.”

Status: As at December 31, 2025, the measures implemented by Information Bulletin 2025-8 have not been tabled as a bill in the National Assembly of Québec and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Quebec’s Voluntary Disclosure Program

On December 18, 2025, Revenu Québec (RQ) announced changes to its voluntary disclosure program (VDP), which will apply to disclosure applications filed after December 17, 2025, as follows:

  • to satisfy the requirement that the application be spontaneous, a taxpayer must now submit it before any audit or investigation has been initiated against them with respect to the information being disclosed (this includes audits or investigations conducted by any law enforcement agency, securities commission or federally or provincially regulated authorities)
  • the “general program” and “limited program” categories have been eliminated and applications are classified according to whether they are “prompted” or “unprompted” applications 

Status: The interest and penalty relief offered through the VDP is administratively granted by RQ and does not require legislation to enact it. 

Trade tariffs and government support

United States President Donald Trump continues to issue executive orders that impose tariffs (or alter tariff rates) on certain goods imported from Canada. The Canadian government has responded with several retaliatory measures, which are modified as the situation evolves, and by providing government support to certain Canadian business sectors. For more information on the current tariff situation and to help your business assess and manage these tariffs, visit our Tariffs and Trade Policy Resource Centre.

Federal, provincial and territorial governments have announced measures intended to support Canadian businesses affected by the tariffs. For tariff-related support programs, see Tariff relief: Unlocking government support.

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Accounting updates — October 1 to December 31, 2025

There were no significant updates relating to the accounting for income tax.

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Federal and provincial/territorial bills 

Table 1 lists key bills that include corporate income tax rate changes or other income tax changes (e.g. for research and development) that were:

  • tabled or received royal assent during 2025, or
  • tabled before 2025, but did not receive royal assent before 2025

Table 1: Federal and provincial/territorial bills
Bolded rows indicate a change in status from October 1 to December 31, 2025.

 

Legislation

Recognized for accounting purposes

 

Bill #

Bill name

Canada

US GAAP
Federal C-15 An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025 Not as at December 31/251

Alberta

39

Financial Statutes Amendment Act, 2025

March 10/25

 May 15/25
12 Financial Statutes Amendment Act, 2025 (No. 2) November 25/25 December 11/25

British Columbia

5

Budget Measures Implementation Act, 2025

March 4/25

 May 29/25

Manitoba

 27

The Income Tax Amendment Act

 March 6/25 June 3/25
46 The Budget Implementation and Tax Statutes Amendment Act, 2025 April 24/25 November 6/25
51 The Budget Implementation and Tax Statutes Amendment Act, 2025 (2) November 4/25 November 6/25

Nova Scotia

 68

Financial Measures (2025) Act

March 5/25

March 26/25
Ontario 24 Plan to Protect Ontario Act (Budget Measures), 2025 May 15/25 June 5/25
68 Plan to Protect Ontario Act (Budget Measures), 2025 (No. 2) November 6/25 November 27/25
Prince Edward Island 21 An Act to Amend the Income Tax Act May 9/25 May 16/25
Quebec 99 An Act to give effect to fiscal measures announced in the Update on Québec’s Economic and Financial Situation presented on 21 November 2024 and in the Budget Speech delivered on 25 March 2025 and to certain other measures May 8/25 October 28/25
6 An Act to give effect to fiscal measures announced in the Budget Speech delivered on 25 March 2025 and to certain other measures November 11/25 December 12/25

Saskatchewan

13

The Income Tax Amendment Act, 2025

March 24/25

 May 13/25
17 The Saskatchewan Commercial Innovation Incentive (Patent Box) Amendment Act, 2025 March 26/25 May 13/25
  1. Because Canada has a minority government, a federal bill is only considered substantively enacted for Canadian GAAP once it passes third reading in the House of Commons; it is considered enacted for US GAAP once it receives royal assent.

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Corporate income tax rates—accounting status (January 1, 2022 to December 31, 2025) 

The following information excludes Canadian-controlled private corporation small business rates and thresholds.

Table 2: Corporate income tax rates—accounting status
There were no changes in status from October 1 to December 31, 2025.

 

 

Effective date

Rate

Recognized for accounting purposes

Bill #

 

 

 

 

Canada

US GAAP

 

Federal

General and manufacturing and processing (M&P)

Before January 1/22

15%1

Before January 1/22

N/A

Provincial SIFT tax factor/rate2

Varies2

Additional tax on banks and life insurers

For taxation years ending after April 7, 20223

1.5%

December 8/224

December 15/22

C-32

Alberta

General and M&P

Before January 1/22

8%

Before January 1/22

N/A

British Columbia

General and M&P

Before January 1/22

12%

Before January 1/22

N/A

Manitoba

General and M&P

Before January 1/22

12%

Before January 1/22

N/A

New Brunswick

General and M&P

Before January 1/22

14%

Before January 1/22

N/A

Newfoundland and Labrador

General and M&P

Before January 1/22

15%

Before January 1/22

N/A

Northwest Territories

General and M&P

Before January 1/22

11.5%

Before January 1/22

N/A

Nova Scotia

General and M&P

Before January 1/22

14%

Before January 1/22

N/A

Nunavut

General and M&P

Before January 1/22

12%

Before January 1/22

N/A

Ontario

General

Before January 1/22

11.5%

Before January 1/22

N/A

M&P

10%

Corporate Minimum Tax (CMT)

2.7%

Prince Edward Island

General and M&P

Before July 1/25

16%

Before January 1/22

N/A
July 1/25 15% May 9/25 May 16/25 21

Québec

General and M&P

Before January 1/22

11.5%

Before January 1/22

N/A

SIFT Distribution Tax

Varies5

Saskatchewan

General

Before January 1/22

12%

Before January 1/22

N/A

M&P

10%

Yukon

General

Before January 1/22

12%

Before January 1/22

N/A

M&P

2.5%
  1. Starting taxation years beginning after 2021, federal Bill C­‑19 (royal assent: June 23, 2022) temporarily reduced corporate income tax rates for qualified zero emission technology manufacturing income by 50% until 2028, with the rate reduction gradually phased out until it is eliminated for taxation years beginning after 2031; these rate reductions are substantively enacted for Canadian GAAP and enacted for US GAAP as at June 23, 2022. Federal Bill C-59: (i) extended the availability of these reduced rates by three years, to 2031, with the rate reduction gradually phased out until it is eliminated for taxation years beginning after 2034; and (ii) expanded these reduced rates to income from certain nuclear manufacturing and processing activities, for taxation years beginning after 2023; these measures are considered substantively enacted for Canadian GAAP as at May 28, 2024, and enacted for US GAAP as at June 20, 2024.
  2. Except for Québec, the “provincial Specified Investment Flow-Through (SIFT) tax rate” is:
    ●       based on the general provincial corporate income tax rate for each province in which the SIFT has a permanent establishment
    ●       10% for SIFTs that do not have a permanent establishment in a province
  3. The additional tax on banks and life insurers applies on taxable income over $100 million; the exemption is shared by related corporations. For a taxation year that includes April 7, 2022, the additional tax is prorated based on the number of days in the taxation year after April 7, 2022.
  4. Because Canada had a minority government, a federal bill was only considered substantively enacted for Canadian GAAP once it passed third reading in the House of Commons.
  5. Québec’s SIFT Distribution Tax equals the Québec corporate income tax rate that would apply if the SIFT were a corporation.

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