What's in Canada's 2026 federal budget

Ottawa presented its 2026 budget on Thursday, November 5, under the title "Masters of our destiny." Four announcements stand out. Businesses can deduct the full cost of new equipment in the year they buy it. Canada puts $65 billion toward doubling the electricity it produces. People with lower incomes get a one-time top-up to the grocery benefit. And the government promises to end homelessness within 10 years.

All the new measures add up to $15.2 billion this year and about $142 billion over five years. None of it is law yet: Parliament still has to vote, and a few ideas are only being consulted on.

Where the new money goes

The biggest share goes to business investment and energy. Next comes a chapter the budget calls culture, communities and Indigenous reconciliation. Here is what the new measures cost from 2026-27 to 2030-31, using the budget's own chapters:

A tax break to get businesses investing

The budget's centrepiece is the Productivity Mega Deduction. Today, when a company buys a machine, a computer system or a building, it deducts the cost from its taxable profit a little at a time, over many years. With the Mega Deduction, a company of any size deducts the whole cost right away, and the rule is permanent. The government says this cuts the tax rate on new investment to 6.4%, the lowest in the G7. It's also the budget's most expensive item, at $36.1 billion over five years.

Two more measures are aimed at young and small companies. Under the Canada Growth Incentive, founders, employees and investors who hold shares of a qualifying young Canadian company for at least three years would pay no tax on up to $15 million of profit when they sell. A second change lets people sell one small business and put the gain into another without paying tax in between.

Research gets money too: $930 million to point the research tax credit toward products that actually reach the market, and $1 billion for large projects through the Strategic Response Fund. Ottawa expects all of this to add about 50,000 jobs by 2030 and raise the economy's output by about $800 a person.

Electricity and energy

The budget puts $65 billion toward doubling the electricity Canada produces. It names the projects: hydro at Churchill Falls and Gull Island in Labrador, built with Québec; the Darlington nuclear plant in Ontario; power lines along BC's north coast; hydro on the Taltson River in the Northwest Territories; a project in Iqaluit; and offshore wind in Nova Scotia.

Closer to home, a National Heat Pump Rebate Program would help up to 820,000 households switch away from oil, propane or electric baseboards. Approvals would take 24 hours, and lower-income homes would get more help. Ottawa also plans to help build more than 55,000 public chargers for electric cars, nearly doubling today's network, and to spend $400 million helping factories cut their energy bills.

Housing and homelessness

Housing gets $45 billion. Most of it flows through Build Canada Homes, the federal housing agency set up in September 2025. The agency gets more money and more federal land to build homes that aren't sold or rented at market prices, working with non-profit, Indigenous, public and private partners. The goal is to build three times as many of these homes over the next 10 years.

About 65,000 people are homeless in Canada, the budget estimates, and Ottawa now says it will end homelessness within 10 years. It starts in Winnipeg, where about 2,000 people have no home. There, Ottawa would build a mental health and addictions treatment centre and 2,000 transitional and supportive homes, and the province and city would run them.

Buyers get more room too. If you put less than 20% down, you need an insured mortgage, and those would now be allowed on homes up to $1.5 million instead of $1 million. First-time buyers and anyone buying a new home could spread payments over 30 years. Ottawa also says it is working with provinces to cut taxes and development fees on new homes, which it says could save an Ontario buyer up to $200,000.

Cost of living

Early in 2027, the Canada Groceries and Essentials Benefit, which used to be the GST credit, gets a one-time 50% top-up. A couple with two children could get up to $679 extra. Low-wage workers get a bigger yearly benefit, up to $3,143 for a family, and people caring for a sick or disabled relative can get up to $1,260 even if they owe no tax.

The federal gas tax stays off until the end of January 2027, then returns at half the rate until April 1. Phone and internet companies could no longer charge you to activate, change or cancel a plan. Your bank would send you a yearly statement of the fees you paid, and you'd get at least 42 days to repay a payday loan. Massages from a licensed therapist would no longer carry GST or HST.

Taxes get simpler as well. Everyone would file and pay by May 15, fewer retirees would have to pay tax four times a year, some costs could be claimed as a set amount without receipts, and your RRSP could stay open after you turn 71. What Canada's new budget means for your money goes through each change and who qualifies.

Defence and security

In 2025-26, Canada spent more than $65 billion on defence, reaching NATO's target of 2% of GDP for the first time since the Cold War ended. The budget says the money is in place to reach 4% this decade, on the way to NATO's 5% goal for 2035. The new measures include drones, a bank to finance defence and security projects, more readiness in the Arctic and support for Canadian defence companies.

Culture, communities and Indigenous reconciliation

This is the second-biggest area of new spending. Measures for Indigenous peoples alone add up to about $26.6 billion over five years. That includes $4.6 billion for drinking water systems in First Nations, plus money for housing, schools and child and family services in First Nations communities.

If you're under 25, national museums stay free for good. The Canada Strong Pass, with free or cheaper entry to parks and museums and discounted VIA Rail trips, comes back next summer, and there's money to celebrate Canada's 160th birthday in 2027. Ottawa will also consult on a Canada Creative Credit. Together with the basic personal amount everyone gets, it would let artists earn up to $45,000 a year from their original work without paying income tax.

Running government

On the other side of the ledger, Ottawa says it is cutting the federal public service by 10%. It also plans to keep day-to-day program spending growing by less than 2% a year, after it grew about 8% a year on average in the 10 years to 2024-25. More government services would use artificial intelligence, and Canada Post would be modernized.

The deficit

Ottawa expects to spend $62.3 billion more than it takes in this year. That's up from $39.3 billion last year, but a little less than the $65.3 billion it predicted in the spring. The deficit shrinks to $52.9 billion by 2030-31, and federal debt stays around 40% of the economy. From 2027-28, the government says, taxes and other revenue will cover all day-to-day costs, so every borrowed dollar will go to investments like housing, power lines and the business write-off.

What happens next

The tax changes only take effect once Parliament passes a budget bill. The RRSP change and the Creative Credit are still being consulted on, and Ottawa has promised more detail in its Spring Economic Update 2027.