Insurance costs will increase for policyholders in Quebec when the current 9 per cent tax on premiums is levelled up to match the 9.975 per cent Quebec sales tax (QST) rate. The adjustment is part of a package of revenue-generating measures in the newly introduced 2025-26 provincial budget, which also include added fees, altered tax credit criteria and elimination of some tax deductions with low uptake.

The measures, which were identified through a recent review of the Quebec government’s tax expenditures, are projected to bolster provincial finances by nearly $3 billion by 2030. This is being characterized as an element of Quebec’s response to the sudden imposition of tariffs on Canadian products entering the United States and related economic uncertainty.

“The rigorous analysis of all the tax measures available in Quebec will enable us to improve our tax system, which will be better adapted to today’s realities and in line with Quebec’s priorities,” says Quebec’s Finance Minister, Eric Girard.

Tax on insurance premiums is scheduled to be harmonized with the QST beginning Jan. 1, 2027 and is expected to garner an extra $996 million in revenue to the end of the 2029-30 fiscal year. Quebec taxpayers will see the increase on property and automobile policies and their contributions to group insurance plans, while the current exempted insurance products, including individual life and health insurance policies and designated mandatory plans, will remain tax-free.

Quebec first introduced the tax on insurance premiums in 1985 at a rate that was in sync with the QST at that time.

“The analysis of the tax on insurance premiums showed no reason justifying why the rate should be lower than that of the QST,” the budget document states. “In other provinces where a tax on insurance premiums is in effect, the rate applicable on these premiums is identical to the provincial portion of the sales tax applicable to goods and services.”

Among other increases, retrieving records from Quebec’s land register will become 50 per cent costlier as of April 1, 2026, when the fee jumps from $1 to $1.50 per document. This is presented as a catch-up with inflation because the $1 fee has been static since 2002. The price increase is projected to raise an extra $8 to $9 million annually.

Emissions implications

The Quebec government anticipates modest outcomes from the elimination of various tax deductions, but they do have repercussions for a small number of claimants. Perhaps most notably for businesses that have targets for greenhouse gas (GHG) emissions reduction, there will be no tax benefit for providing employees with subsidized or free public transit passes or for establishing a ride-sharing service for employees who commute from outlying municipalities after Dec. 31, 2027.

Until then, businesses can continue to deduct 100 per cent of those costs from their taxable income. The provincial tax expenditure review found that only about 100 companies are claiming the deductions — first introduced in 2005 for provision of transit passes and then expanded to include ride-sharing services in 2012 — and those claimants are projected to collectively pay about $100,000 annually in additional tax beginning in 2028.

Companies with electric or plug-in hybrid vehicles in their fleets should budget for new fees beginning in 2027. Similar to Saskatchewan and Alberta, Quebec will introduce an annual levy for vehicles that do not contribute to road maintenance via the fuel tax. As well, EV drivers will no longer enjoy free access to toll bridges and provincially operated ferries after Dec. 31, 2026.

The new road-use fee will initially be set at $125 for EVs and $62.50 for plug-in hybrids then indexed to inflation in subsequent years, with all revenues channelled into the provincial land transportation network fund (LTNF). The levy is projected to raise nearly $163 million annually by 2029-2030, and is expected to counterbalance a drop in road maintenance funds collected from the fuel tax as EV adoption increases in Quebec.

“These (introductory) amounts are still lower than those paid by the majority of motorists for the specific tax on fuel,” the budget document submits. “The measure is in line with the government’s efforts to find new sources of revenue for funding land transportation infrastructure and services, and to ensure fairness among users of these services.”

Meanwhile, a tax fuel rebate on the purchase of biodiesel has been eliminated as of March 26, 2025. This appears to be so negligible to provincial finances that no estimate is provided of the additional revenue that will be unlocked.

“This measure has not achieved its objective of encouraging the use of biodiesel in Quebec and thus contributing to GHG reduction efforts, due to the small number of businesses using it and the small amounts involved,” the budget document states.

Alignment and optimization

Also on the tax front, a phased increase to the public utilities tax (PUT), beginning in 2027, will bring it more line with property tax rates by 2035. Electricity, gas and telecommunications facilities and networks are not included in municipal assessment rolls, but, instead, pay the PUT, which is calculated on the net value of assets in the utility operator’s system. Under this formula, the PUT rate increased by just 1.5 per cent between 2005 and 2021, lagging well behind average increases to property tax rates in the same period.

The phased increase will eventually nudge the PUT rate up to 1.5 per cent, which is on par with the lowest property tax rate currently levied in Quebec. The adjustment is projected to garner about $373 million in additional revenue up to the end of the 2029-30 fiscal year.

Proptech developers may be captured in some of the planned changes to Quebec’s innovation tax credits. Beginning in the 2026 tax year, this will bring eight existing tax measures for the development of IT-related businesses into a single tax credit that will be targeted to “higher value-added” activities with a focus on artificial intelligence (AI). As well, current mining tax credits will have a sharper focus on critical minerals, beginning March 26, 2025.

Together, the Quebec government projects this “optimizing” of tax credits will free up about $604 million to the end of the 2029-30 fiscal year. This is then to be combined with an additional $272 million in new financing and poured back into financial support for innovative businesses.

Although details are yet-to-be-released, the budget also confirms a $200 million top-up for the 2025-30 implementation plan for achieving Quebec’s emissions reduction target — a 37.5 per cent decrease relative to 1990 levels by 2030. That will push the budget up to $10.2 billion for the next five-year period.