November 28, 2025•1 Minute

Quebec Economic and Financial Update – Fall 2025

On November 25, 2025, the federal government provided an update on Canada’s economic and financial situation.

Reduction of the Basic Contribution Rate to the Québec Pension Plan (QPP) for 2026

The basic contribution rate to the QPP for the year 2026 will be set at 10.6%, a decrease of 0.2% compared to 2025.

This reduction will be shared equally between employees and their employers (5.3% each).

Self-employed workers will also pay 10.6%.

Reduction of Contribution Rates to the Québec Parental Insurance Plan (QPIP) for 2026

Starting January 1, 2026, there will be a total reduction of 13% in QPIP contribution rates compared to those in effect in 2025.

Temporary Exemption from the Health Services Fund (HSF) Contribution to Support Agriculture, Forestry, and Fisheries

Any employer whose total payroll is attributable by more than 50% to activities represented by specific NAICS codes (agricultural crops, livestock, forestry, fishing, sawmills, pulp mills) will be fully exempt from paying the HSF contribution for 2026 and 2027.

Harmonization with Various Tax Measures Announced in the Federal Budget of November 4, 2025

On November 4, 2025, the federal government confirmed during its 2025 budget presentation that certain measures would be canceled.

Québec’s Ministry of Finance now intends to harmonize its tax legislation and regulations regarding:

  • Cancellation of the increase in the capital gains inclusion rate;
  • Increase in the cumulative capital gains exemption;
  • Cancellation of the Canadian Entrepreneurs Incentive, while maintaining the increase in the cumulative capital gains exemption.

Measures Adopted from the Federal Budget of November 4, 2025

Québec’s tax legislation and regulations will also be amended to integrate measures relating to:

  • Eligible investments for registered plans (except budget resolutions 10(1) and 13(4));
  • Immediate expensing for manufacturing or processing buildings;
  • Patronage dividends paid in the form of agricultural cooperative shares;
  • Eligible activities for Canadian exploration expenses;
  • Transfer pricing standards;
  • Investment income from assets covering insurance risks.

Measures Not Adopted from the Federal Budget of November 4, 2025

Certain measures were not adopted because they do not align with Québec’s tax system or because the current system is satisfactory:

  • Tax credit for personal support workers;
  • Home accessibility tax credit;
  • Tax credit for critical mineral exploration;
  • Investment tax credit for clean technology manufacturing;
  • Investment tax credit for carbon capture, utilization, and storage;
  • Investment tax credit for clean electricity and the Canada Growth Fund;
  • Etc.

Extension and Adjustment of the Refundable Tax Credit for Gaspésie and Certain Maritime Regions of Québec

The refundable tax credit for Gaspésie and certain maritime regions of Québec was introduced on November 17, 2000. It is currently scheduled to end on December 31, 2025. The credit rate varies depending on the recognized activities carried out by the eligible corporation.

Modifications include:

  • Expanding the territorial scope of seafood processing activities, starting in 2025, to include the RCMs of La Matapédia, La Mitis, and Rimouski-Neigette in the Bas-Saint-Laurent region;
  • Extending the eligibility period until December 31, 2030.

 

New Extension of the Income Averaging Mechanism for Recognized Forestry Producers

The income averaging mechanism for recognized forestry producers with respect to private forests will be extended for two years, for both income tax and individual HSF contributions.

Adjustment to the Refundable Tax Credit for Mining or Other Resources

Generally, a corporation that incurs eligible expenses in a taxation year and does not operate any mineral resource or oil/gas well may claim this tax credit at a rate of up to 45%.

As announced in the March 25, 2025 budget, a cap of $100 million in eligible expenses per five-year period was introduced.

The calculation of the cumulative cap will be adjusted so that only half of the eligible expenses related to mineral resources in Northern Québec, primarily attributable to one or more critical and strategic minerals, will be considered.

This measure applies to fiscal years beginning after March 25, 2025.

Increase in Exemptions for Calculating the Premium Payable under the Public Prescription Drug Insurance Plan

The general prescription drug insurance plan ensures equitable access to necessary medications for all taxpayers. Adults registered with RAMQ must contribute to the cost of pharmaceutical services and medications provided to them. Adults whose income consists mainly of social assistance benefits are exempt.

For 2025, the government will increase the amount of each exemption as follows:

Household Composition Maximum Income Threshold for exemption
1 adult, no child 19 890 $
1 adult, 1 child 32 240 $
1 adult, 2 children 36 460 $
2 adults, no child 32 240 $
2 adults, 1 child 36 460 $
2 adults, 2+ children 40 360 $

 

For more information on the measures announced in the Fall 2025 Economic Update, please contact your FBL representative.

 

Sources :

  • Finances Québec, Update on Québec’s Economic and Financial Situation – Fall 2025.
  • Information Bulletin 2024-9 – Tax Measures Announced in the Update on Québec’s Economic and Financial Situation and Other Measures, November 25, 2025.

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