Quebec outlines tax cuts for workers, plans to use the Green Fund surplus for debt reduction, and support measures for sectors impacted by U.S. tariffs.
Quebec Economic Update Introduces Tax Breaks and Debt Strategy
Growth Outlook Improves
Quebec’s government announced on Tuesday that the province’s economy is expected to grow faster than previously projected, setting the stage for new fiscal measures. The economic update forecasts real GDP increases of 0.9% in 2025 and 1.1% in 2026, following a 1.7% gain in 2024. The projections aim to guide policy decisions for the years ahead, signalling cautious optimism amid national economic uncertainty.
New Measures Aim to Boost Disposable Income
Finance Minister Eric Girard confirmed the introduction of tax relief designed to support workers beginning January 1, 2026. The province plans to reduce contribution rates to the Quebec Pension Plan (QPP) and Quebec Parental Insurance Plan (QPIP). Under the change, employees could save up to $137, while self-employed workers may retain up to $259 annually. Girard said the measures are intended to help Quebecers cope with inflation and reinforce household purchasing power.
Green Fund Surplus Redirected Toward Debt Reduction
A significant shift will see the province’s $1.8-billion Green Fund surplus reallocated to Quebec’s Generations Fund in the 2026–27 fiscal year. The move, according to Girard, supports long-term debt reduction and strengthens the province’s commitment to intergenerational fairness. Implementation hinges on the passage of Bill 7, an omnibus bill sponsored by Treasury Board President France-Élaine Duranceau. With updated estimates, Quebec now projects a $9.9-billion deficit for 2025–26, slightly lower than forecast last spring.
Long-Term Debt Targets Reinforced
The update confirms that the province’s net debt burden will reach 39% of GDP by March 31, 2026. The government continues to target a balanced budget by 2029–30 and aims to reduce the debt burden to 32.5% of GDP by 2037–38. Officials argue the repositioning of surplus funds will help stabilize provincial finances and ensure greater resilience during periods of economic volatility.
Support Rolled Out for Tariff-Hit Sectors
Quebec is also delivering targeted relief to industries struggling under U.S. President Donald Trump’s tariffs, including agriculture, forestry, and fisheries. Businesses in these sectors will receive a two-year payroll tax holiday, dropping their contribution rate to the Health Services Fund to 0% for 2026 and 2027. Estimated savings include $43,000 for forestry, $6,000 for agriculture, and $2,500 for fisheries, helping firms retain cashflow and maintain operations.
Incentives for Industrial Investment
To strengthen manufacturing competitiveness, Quebec will introduce accelerated write-offs and immediate expensing for building investments in production facilities. The measure applies to property acquired on or after November 4, 2025, and will be phased out from 2030 to 2033. The government says the move mirrors federal policy and supports businesses planning to modernize plants and scale production capacity.
