Cornwall, Ontario – The Ontario government has announced a significant tax reduction for small businesses as part of its 2026 Budget. The small business corporate income tax rate has been cut from 3.2% to 2.2%, a 31.25% decrease that will be phased in over the next three years. This change will provide more than 375,000 small businesses across the province with up to $5,000 in tax savings each year, helping owners manage rising costs and economic uncertainty. 

Supporting Ontario’s Small Business Community 

Small businesses employ more than 2.5 million people in Ontario. Government officials say this tax cut will help business owners reinvest in their operations, reach new customers, and create more opportunities for workers. 

Associate Minister of Small Business Nina Tangri highlighted that small businesses are “the driving force behind our economy,” and that this tax relief will help them grow during a period marked by global economic challenges and U.S. tariffs. 

Quick Facts 

  • 98% of Ontario businesses with employees are small businesses. 
  • Ontario’s Small Business Enterprise Centres helped start over 8,000 new businesses, expand 2,700, and create more than 15,800 jobs in 2024–25. 
  • The Ontario Made Manufacturing Investment Tax Credit provides a 15% credit (up to $3 million per year) to help manufacturers lower costs and grow. 
  • The province has reduced the Gasoline Tax by 5.7 cents per litre and the Fuel Tax by 5.3 cents per litre. 
  • The Employer Health Tax exemption has increased from $490,000 to $1 million, reducing costs for eligible employers. 

“Small businesses are the backbone of Ontario’s economy, and our government is taking action to help them grow, invest and create good-paying jobs,” said Peter Bethlenfalvy, Minister of Finance. “Today’s tax cut will put more money back into the hands of local entrepreneurs in communities right here in Pickering-Uxbridge and across Ontario, giving them the flexibility to expand, hire and compete in an increasingly uncertain global environment.” 

Broader Economic Support 

The province says these measures are part of a larger plan to protect workers and businesses from the impacts of U.S. tariffs and global economic pressures. Since 2025, Ontario has provided nearly $30 billion in relief and support. Actions taken since 2018 are expected to result in almost $10 billion in cost savings for businesses this year. 

The 2026 Budget, A Plan to Protect Ontario, outlines the government’s strategy to make the province one of the most competitive places to invest and do business in the G7. 

Additional Resources