Ontario dropped its 2026 budget today.
There is a lot in it. Most of it will not affect you.
But some of it will. And I want to make sure you know exactly what changed, what it means for your money, and what you need to do about it.
Here is every tax measure from the 2026 Ontario Budget that matters for real estate investors and small business owners.
1. Small Business Tax Rate Is Going Down
This is the biggest win for incorporated business owners in this budget.
Right now, Ontario’s small business corporate income tax rate is 3.2 percent. The government is proposing to cut it to 2.2 percent, effective July 1, 2026.
If your tax year straddles July 1, the rate reduction will be prorated.
Here is what the combined federal and Ontario rates will look like once this passes:
| Corporation Type | Combined Federal + Ontario Rate |
| Small business (up to $500K active income) | 11.2% |
| General corporation (non-M&P) | 26.5% |
| General corporation (manufacturing) | 25.0% |
The small business limit is $500,000 of active business income. That limit starts to phase out when your corporation, or an associated group of corporations, has over $10 million of taxable capital in Canada. It phases out completely at $50 million.
One more piece connected to this: Ontario is also reducing the non-eligible dividend tax credit rate from 2.9863 percent to 1.9863 percent, effective January 1, 2027. This aligns the personal tax credit with the lower corporate rate. When your corporation pays less tax, the dividend tax credit adjusts accordingly so there is no double benefit.
What this means for you: If you are incorporated, your corporation keeps more money after tax starting July 1, 2026. More retained earnings to reinvest, pay down debt, or fund your next property purchase.
2. The HST Rebate on New Homes Just Got a Major Upgrade
This one is big for real estate investors and anyone buying a new build.
What Is the HST Rebate?
When you buy a brand new home from a builder in Ontario, you pay HST on the purchase price. HST is the Harmonized Sales Tax, which combines the federal GST and the Ontario provincial portion into a single 13 percent tax.
The New Housing Rebate gives some of that tax back. Under the old rules, the Ontario portion of the rebate was capped at $24,000. That cap has not kept up with home prices in this province.
Ontario just proposed to fix that.
What Changed
The government is proposing to temporarily enhance the rebate for one year. Here is the full breakdown by purchase price:
| Purchase Price | Ontario Portion (8%) | Combined Federal + Ontario (13%) |
| Up to $1,000,000 | Full 8% — up to $80,000 | Full 13% — up to $130,000 |
| $1,000,000 to $1,500,000 | $80,000 maintained (flat) | $130,000 maintained (flat) |
| $1,500,000 to $1,850,000 | Reduced on a linear basis | Reduced on a linear basis |
| $1,850,000 and above | $24,000 (same as current rules) | $24,000 (same as current rules) |
No eligible buyer gets less than they would today. The budget is clear on this.
Ontario is covering the 8 percent provincial portion. The federal government has agreed to cover the 5 percent federal portion, subject to passage of federal legislation. Together that is the full 13 percent HST removed on qualifying new homes.
And for investors buying a new rental property, the New Residential Rental Property Rebate is getting the same enhancement. Up to $130,000 back on a qualifying new build that you plan to rent out long term.
The Date That Actually Matters
It is not your closing date that counts. It is your agreement of purchase and sale date.
There are two qualifying paths:
Path 1 — New builds not yet started: Sign your purchase agreement with a builder between April 1, 2026 and March 31, 2027. Construction must begin by December 31, 2028 and be substantially complete by December 31, 2031.
Path 2 — Builds already under construction: If construction began before March 31, 2026, you can still qualify. Sign your purchase agreement between April 1, 2026 and March 31, 2027, and the home must be substantially complete by December 31, 2029.
You could sign in early 2027 and still be moving in years later. The APS date is what locks in your eligibility.
Who Qualifies
The eligibility rules have not changed. These are the same criteria that exist today:
The New Housing Rebate requires the home to be your primary place of residence.
The New Residential Rental Property Rebate requires the home to be used as a long-term residential rental property.
A couple of important notes for real estate investors:
Short-term rentals like Airbnb likely do not qualify. The CRA’s general position is that short-term rentals are commercial activity, not residential rental. The budget does not change that.
Owner-built homes are not addressed in the budget at all. The language exclusively refers to an agreement of purchase and sale with a builder. If you are hiring contractors to build your own home, this enhanced rebate may not apply to you.
What Happens After March 31, 2027
This is the part that should get your attention.
After the enhancement period ends, the Ontario HST New Housing Rebate and the New Residential Rental Property Rebate are proposed to be permanently eliminated.
Not reduced. Eliminated.
The only rebates that survive are the first-time home buyer rebate and the purpose-built rental housing rebate, which continue to follow federal eligibility rules.
What this means for you: If you are buying a new build as a primary home or a long-term rental, this one-year window may be your last chance to access any provincial HST rebate at all. The APS date is the trigger. April 1, 2026 to March 31, 2027.
3. First-Time Home Buyer HST Rebate — Effective Date Moved Earlier
This is a smaller update but worth knowing.
Back in October 2025, Ontario announced a proposal to remove the full 8 percent provincial HST on new homes for first-time buyers on homes valued up to $1 million.
The federal government then moved up the effective date of the matching federal rebate to March 20, 2025.
Ontario is now aligning with that earlier date. This means first-time buyers who signed a purchase agreement with a builder on or after March 20, 2025 could be eligible for the provincial rebate, not just those who signed after the originally announced date.
This still requires federal regulations to pass before it comes into force. Ontario is working with the federal government on implementation.
What this means for you: If you are a first-time buyer who signed an APS on or after March 20, 2025, you may qualify for this rebate. Worth confirming with your accountant once the federal regulations pass.
4. Other Measures in the Budget
The rest of the budget tax changes are narrower in scope. Here is the short version for completeness.
Ontario Trillium Benefit: The lump-sum payment threshold is increasing from $360 to $500 starting July 2026. If you receive OTB of $500 or less for the year, you will get it in one upfront payment instead of monthly. The total amount does not change.
Insurance Premium Tax for benefit plans: Employers who run funded employee benefit plans can elect to defer the tax hit to when benefits are paid out rather than when contributions go in. A cash flow timing change, effective April 1, 2026.
Non-Resident Speculation Tax: First Nation individuals registered under the Indian Act are being excluded from the NRST. A fairness correction that does not affect most buyers.
Alcohol taxes: Beer, wine, and spirits taxes are being simplified into single rates effective April 1, 2026. Relevant only if you own or operate a brewery, winery, or distillery.
Quick Summary: All 2026 Ontario Budget Tax Changes
| Measure | What It Means | Effective Date |
| Small business CIT rate cut (3.2% to 2.2%) | More retained earnings for incorporated businesses | July 1, 2026 |
| Enhanced HST rebate on new homes (up to $80,000) | Up to $130,000 combined federal + Ontario relief. APS date triggers eligibility. Two qualifying paths. | APS April 1, 2026 to March 31, 2027 |
| HST rebate permanently eliminated after enhancement period | After March 2027, provincial HST rebate is gone for most buyers | After March 31, 2027 |
| First-time home buyer HST rebate — effective date moved to March 20, 2025 | First-time buyers who signed APS from March 20, 2025 may now qualify | March 20, 2025 onward |
| Other measures (OTB, Insurance Premium Tax, alcohol taxes) | Narrow scope — see Section 5 for brief summary | Various 2026 dates |
The Bottom Line
This budget has something real for both small business owners and real estate investors.
For incorporated business owners, the small business tax rate cut means more money staying inside your corporation starting July 1, 2026.
For real estate investors and new home buyers, the HST rebate enhancement is a significant opportunity. But it is tied to a hard deadline on your agreement of purchase and sale date. And after that deadline, the rebate disappears permanently.
This is not about eliminating tax. It is about timing your moves right and keeping more of what you earn while the window is open.
Next Steps
We help everyday Canadians navigate the confusing world of taxes—so you can keep more of what you earn. Want to make sure you’re not leaving money on the table? Book a consultation with my team today.
Until next time, happy Canadian Real Estate Investing.
Cherry Chan, CPA, CA
Your Real Estate Accountant
