Province Announces $8 Billion Ontario Competitiveness Tax Cut to Support Investment and Create 30,000 Jobs

Proposed tax measures would help Ontario stand up to tariffs by building a more competitive, resilient and self-reliant economy

The Voice of Canada  

Ontario is delivering on its commitment to stand up to tariffs and build the most competitive economy in the G7 through the Ontario Competitiveness Tax Cut, part of Ontario’s multi-year Tax Action Plan. This $8 billion provincial tax relief measure, which is the provincial component of the federally announced Productivity Mega Deduction, would lower the cost of business investment by permanently allowing businesses to immediately write off 100 per cent of the value of a wide range of assets. This measure is estimated to support the creation of 30,000 new jobs in Ontario by providing over $8 billion in additional provincial tax relief over the next five years. This, along with previously announced tax measures, brings Ontario’s marginal effective tax rate to just 3.6 per cent, well below the average rate in the United States, the OECD and the G7.

“In the face of U.S. tariffs, our government is helping Ontario businesses invest, grow and remain competitive on the global stage by lowering the cost of investing and doing business,” said Peter Bethlenfalvy, Minister of Finance. “The Ontario Competitiveness Tax Cut will be a gamechanger for business investment in the province, supporting 30,000 new jobs as we continue working to make Ontario the most competitive business environment in the G7.”

Following the passage of federal legislation, eligible businesses would be able to immediately write off 100 per cent of the value of a wide range of capital investments, including fibre-optic cable, software, aircraft and certain vehicles, patents, rail track, machinery and equipment, bridges and roads. These new measures are estimated to reduce Ontario’s Marginal Effective Tax Rate (METR) by 6.1 percentage points. In 2026, Ontario’s METR is lower than the U.S. with an average METR of 16.9 per cent, the OECD at 19.0 per cent, and the G7 at 26.0 per cent, as reported by the Department of Finance Canada.

The Ontario Competitiveness Tax Cut, which parallels the proposed federal Productivity Mega Deduction, is estimated to attract at least $11 billion in additional capital investment to the province, creating 30,000 new jobs and adding $6 billion to gross domestic product (GDP).

Combined with the accelerated writeoff measures included in the 2026 Budget, the Ontario Competitiveness Tax Cut would bring Ontario’s total tax relief in support of business investment to more than $12 billion over five years.

This builds on key actions taken since 2018 to provide significant tax relief through the government’s multi-year Tax Action Plan, which launched in 2025. Since then, the government has acted swiftly to build a more competitive tax environment that attracts investments, creates good-paying jobs for Ontario workers and helps lower costs for families. This includes a Small Business Tax Cut that was included in Budget 2026, which is saving more than 375,000 small businesses up to $5,000 each year and providing $1.1 billion in tax savings over the next three years.

As Ontario faces global economic uncertainty, the government remains focused on making Ontario the most competitive place in the G7 to invest and do business. Improving Ontario’s tax competitiveness for business investment is a key part of this initiative. The province is also focused on cutting red tape and reducing permitting approval times for businesses to save them time and money. More information about how the government continues to make progress on its plan to protect Ontario will be included in the 2026 Fall Economic Statement, which will be released on October 29, 2026.

Quick Facts

• Since 2018, Ontario has attracted over $235 billion in investment from international and domestic companies. Key government actions taken since 2018 have helped create these conditions. These actions would enable $10.2 billion in estimated cost savings and support for Ontario businesses in 2026, of which $4.8 billion would go to small businesses.
• The proposed immediate writeoff measures would improve Ontario’s tax competitiveness compared to the United States, the G7 and Organisation for Economic Co-operation and Development (OECD) averages.