May 1, 2026•1 Minute

QUÉBEC – INCREASE IN THE SMALL BUSINESS DEDUCTION RATE AND INTRODUCTION OF A REFUNDABLE TAX CREDIT FOR ACCESS TO HOMEOWNERSHIP

INCREASE IN THE SMALL BUSINESS DEDUCTION RATE

On April 29, 2026, the Québec government announced an increase in the small business deduction (SBD) rate in order to reduce the tax burden of Québec small and medium-sized enterprises.

This measure will apply to a corporation’s taxation years beginning after April 29, 2026.

Enhancement of the SBD

The current SBD rate of 8.3% will be increased to a maximum rate of 9.3%. As a result, eligible income for the SBD (up to $500,000), currently taxed at a rate of 3.2%, will be taxed at a minimum rate of 2.2%.

All other rules relating to the SBD remain unchanged (eligibility criteria, paid hours, business limit, etc.).

Corresponding adjustment to the dividend tax credit rate for non-eligible dividends

In order to maintain the principle of integration under the Québec tax system, the current dividend tax credit rate for non-eligible dividends of 3.42% will be reduced to 2.69% of the grossed-up amount of a dividend received or deemed received after December 31, 2026.

REFUNDABLE TAX CREDIT FOR ACCESS TO HOMEOWNERSHIP

On April 17, the Québec government also announced the introduction of a new refundable tax credit for access to homeownership.

Under the Act respecting duties on transfers of immovables, every municipality must levy a duty on the transfer of an immovable located within its territory, namely the transfer duty (also known as the “welcome tax”).

In order to alleviate the costs associated with the acquisition of a first residence or an adapted home for persons with a severe disability, the Québec government has introduced a new refundable tax credit designed to refund part of the transfer duty payable by eligible purchasers.

This measure comes into force as of the 2026 taxation year for housing units acquired after December 31, 2025.

Eligibility conditions

The tax credit is available to an individual (other than a trust) who resides in Québec and who acquires an qualifying home after December 31, 2025.

An qualifying home is a housing unit located in Québec that is acquired:

  • either by the individual or the individual’s spouse, with the intention of making it the individual’s principal place of residence, provided that it is the individual’s first housing unit;
  • or by the individual, with the intention of making it the principal place of residence of a specified disabled person, provided that the housing unit allows that person to live in a home that is easier to access or better adapted.

For a housing unit to qualify as a first home, neither the individual nor the individual’s spouse must have owned a housing unit that the individual inhabited during the four calendar years preceding the year in which the first home is acquired.

With respect to a specified disabled person, the person must be the individual or a related person and must meet the eligibility criteria for the disability tax credit for a severe and prolonged mental or physical impairment in the current taxation year or the preceding taxation year.

Amount of the credit

The amount of the credit, up to a maximum of $5,875, is calculated as follows:

  • 100% of the first $5,000 paid in transfer
  • 25% of the amount exceeding $5,000 paid in transfer duties, up to a maximum of $875.

A gradual reduction of this amount applies to housing units with a value between $750,000 and $1,000,000. For housing units with a value of $1,000,000 or more, the tax credit is nil.

If more than one individual is entitled to the refundable tax credit for access to homeownership in respect of the same qualifying housing unit, the amount of the credit must be allocated among those individuals.

Advance payment

Provided that certain conditions are met and that the amount of the credit the individual expects to be entitled to exceed $1,000, an application for an advance payment of the tax credit may be filed using a prescribed form.

For more information on these new measures, we invite you to contact your FBL representative.

 

Sources:   Finances Québec, Information Bulletin 2026-2 Finances Québec, Information Bulletin 2026-3

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