This content is based on information available at the time of publication. Given the volatile trade landscape, some of these rules may have since changed. Nevertheless, the information provided remains highly relevant for businesses seeking to navigate the current market upheavals.
Québec’s Finance Minister unveiled the 2025-2026 budget on March 25, 2025, which includes a raft of measures designed to support businesses. Here’s an overview of the key features affecting Québec businesses by BDO’s Tax and Government Incentives teams.
Corporate tax measures
Tax credit for research, innovation, and commercialization
To offer a more streamlined and competitive innovation tax assistance system, the Government of Québec is introducing a new refundable tax credit for research, innovation, and commercialization (CRIC) in its 2025-2026 budget to replace the following six tax measures, which will be abolished:
- Tax credit for salaries and wages (R&D)
- Tax credit for university research
- Tax credit for private partnership pre-competitive research
- Tax credit for fees and dues paid to a research consortium
- Tax credit for an in-house design activity
- Tax credit for technological adaptation services
Two other R&D-related measures have also been repealed:
- Tax break for foreign researchers
- Tax break for foreign experts
The CRIC will support a wider range of eligible activities and expenses including:
- Pre-commercialization activities
- R&D-related equipment expenditures
To better support innovation spending, CRIC rates will be based on a company’s amount of eligible spending rather than its size:
- 30% on the first $1 million of eligible spending above the exclusion threshold
- 20% on all eligible spending above this $1 million of spending over the exclusion threshold.
The exclusion threshold will be the greater of:
- the basic personal amount ($18,751 in 2025) for each employee, prorated for time spent on R&D or pre-commercialization activities, or
- $50,000.
CRIC and federal Scientific Research and Experimental Development (SR&ED) tax credit complementarity
The CRIC will support a business’s salaries and wages beyond the R&D stage—including equipment expenses—and will promote the purchase of new technology and productive assets used in R&D or pre-commercialization activities.
In the 2024 Fall Economic Statement, the federal government announced a number of enhancements to the Scientific Research and Experimental Development (SR&ED) tax credit that included reinstating the eligibility of capital expenditures.
Proposed changes to the federal SR&ED tax credit are currently pending as a result of Parliament’s prorogation to March 24, 2025.
Modernizing the tax credit for the development of e-business
The tax credit for the development of e-business, or CDAE as the French language abbreviation, provides tax assistance to IT companies specializing in e-business activities such as computer systems design and software development.
The government believes that some of the activities supported by the tax credit are no longer innovative or high value-added, and that certain technology adoption programs are no longer seen as new or emerging.
As a result, changes will be made to update the range of eligible activities under the tax credit in order to:
- refocus tax assistance on e-businesses that meaningfully integrate artificial intelligence (AI) functionalities;
- include data processing and hosting activities to promote AI companies’ eligibility; and
- exclude maintenance or scaling activities.
Examples of AI solutions include:
- Chatbots, virtual assistants, voice recognition and natural language processing;
- Personalized recommendation systems; and
- Metadata analysis and predictive tools.
Reducing tax assistance for companies engaged in business-to-business outsourcing
The tax law provides that both the refundable and non-refundable tax credit rates will be halved when at least 50% of a company’s gross revenue is derived from an application it developed for use exclusively outside Québec by a related entity.
Applicable TCEB rates(1) (per cent) | |||||
|---|---|---|---|---|---|
| 2024 | 2025 | 2026 | 2027 | 2028(2) | |
| General rate | |||||
| Refundable tax credit | 24.0 | 23.0 | 22.0 | 21.0 | 20.0 |
| Non-refundable tax credit | 6.0 | 7.0 | 8.0 | 9.0 | 10.0 |
| TOTAL | 30.0 | 30.0 | 30.0 | 30.0 | 30.0 |
| Reduced rate - Outsourcing outisde Québec | |||||
| Refundable tax credit | 24.0 | 23.0 | 11.0 | 10.5 | 10.0 |
| Non-refundable tax credit | 6.0 | 7.0 | 4.0 | 4.5 | 5.0 |
| TOTAL | 30.0 | 30.0 | 15.0 | 15.0 | 15.0 |
(1) A qualified corporation whose taxation year does not correspond to the calendar year must, in calculating its tax credits for a taxation year, take into account the rates in effect for the calendar year in which its taxation year begins.
(2) Rates applicable to the 2028 calendar year will apply to subsequent years.
Source: Government of Québec, Budget 2025-2026: for a strong Québec, additional information, Table A.2, p. A.36
These changes will apply to both refundable and non-refundable tax credits for taxation years beginning after December 31, 2025.
The CDAEIA will help the government save more than $540 million over the framework’s three-year horizon: 2027-2028 to 2029-2030.
Transitional assistance in the wake of U.S. tariffs
The Government of Québec wishes to support businesses that would experience liquidity problems resulting from the imposition of tariffs by the U.S. government. In the 2025-2026 budget, the government is providing financial assistance in the form of loans to affected businesses to the tune of $1.6 billion in liquidity. Appropriations of $400 million over two years are earmarked for this initiative.
The budget speech does not specify which financial assistance programs will be enhanced, but all signs point to the recently announced Frontière and ESSOR programs run by the Ministère de l’Économie, de l’Innovation et de l’Énergie (MEIE).
Supporting investment projects
In its 2025-2026 budget, the government is announcing $3.5 billion in initiatives over five years to support investment projects.
Extending accelerated depreciation measures: $2.4 billion over five years
The accelerated depreciation measures the Government of Québec introduced in 2018 to encourage business investment are being phased out which began on January 1, 2024 and will conclude at the end of 2027.
In its 2024 Fall Economic Statement, the federal government announced that it would extend accelerated capital cost allowance measures for an additional five years starting January 1, 2025, and phase them out over four years after 2029. The Government of Québec intends to move in lockstep with its federal counterpart once this is rolled out. However, as the Parliament of Canada has been prorogued, the law introducing it has not yet been enacted.
Consequently, Québec will reinstate the 100% depreciation rate from the year of acquisition until 2029 for:
- manufacturing and processing machines and equipment;
- clean energy generation and energy conservation equipment; and
- zero-emission vehicles.
Applicability depends on whether or not the assets were subject to the half-year rule. Under this scheme, the deduction can be up to three times the amount of the standard first-year deduction.
Promoting business projects: $900 Million over three years
The government can provide tailored, flexible financial support to businesses, notably through the Economic Development Fund.
It can fund corporate projects and promote automation, robotization, digital transformation, and AI integration using yet undefined tools at its disposal. The MEIE is expected to announce shortly that it will strengthen financing programs, particularly the ESSOR program, to reflect the priorities identified above. These significant amounts are earmarked to support several billion dollars of private-sector investment.
Boosting our capacity to innovate
Fostering innovation in strategic sectors
With the 2022–2025 Québec Life Sciences Strategy coming to a close, the government has earmarked $54 million over three years to renew it. The strategy focuses on five priorities:
- Generating synergies to address major health challenges
- Developing human capital and attracting talent
- Supporting the creation and growth of innovative businesses
- Attracting and executing investment projects
- Spurring the commercialization of innovations
The Government of Québec intends to maintain its commitment to corporate research and innovation in priority sectors such as the battery industry, life sciences, AI, microelectronics, and aerospace. In its 2025-2026 budget, Québec earmarked $15 million over three years to accelerate businesses’ uptake of cutting-edge technologies, for instance by supporting innovative goods, services, processes development, and collaborative innovation projects.
We expect this to result in exciting calls for proposals in the near future.
Propelling young businesses
To ensure continued funding for innovative, high-potential young businesses, the Government of Québec announced the creation of a new $200 million investment fund in the 2025-2026 budget.
The fund will provide ongoing support to young businesses’ efforts to invest in and bring to market their innovations. More details about the fund will be announced later.
Promoting our critical and strategic minerals
The 2025-2026 budget earmarks $88 million over five years to adopt a new Québec Plan for the Development of Critical and Strategic Minerals for 2025-2030 to:
- promote new deposit discovery, innovation, and expertise;
- foster new mining projects and continue to expand value chains; and
- generate economic spinoffs for local communities and ensure sustainable management of our resources.
Details of these measures will be set out in the new Québec Plan for the Development of Critical and Strategic Minerals.
Diversifying the forest industry and driving innovation
The government has earmarked $52.1 million over three years to diversify the forest industry and drive innovation in all industries using forest products or manufacturing forest equipment. It will support large-scale innovative projects, including the Wood Innovation Program, which funds investment projects (up to $2.5 million) and studies (up to $75,000).
Innovation may involve developing new products or processes, or implementing innovative technologies, equipment, and systems.
BDO can help
For personalized assistance to help you make the most of the Government of Québec’s new measures, contact a BDO professional in the province.
Manager, Tax Credits and Government Incentives
Manager, Tax Credits and Government Incentives
Partner, Tax Credits and Government Incentives
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Senior Specialist, Tax Credits and Government Incentives
The information in this publication is current as of April 2, 2025.
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