Corporate Tax Rates and Legislation: Q4 2025 Accounting Status

Legislative changes — October 1, 2025 to December 31, 2025

Legislative developments from October 1 to December 31, 2025, that affect income taxes, are outlined below.

2025 Federal budget

The federal government’s November 4, 2025 budget does not change general or manufacturing and processing (M&P) corporate income tax rates. Key federal budget tax measures:

• provide immediate expensing (i.e. a 100% first-year capital cost allowance [CCA] deduction) for the cost of acquiring, or making additions or alterations to, eligible buildings acquired after November 3, 2025 and first used for M&P before 2030 (phased out 2030 to 2033 and eliminated after 2033)
• increase the annual scientific research and experimental development (SR&ED) expenditure limit, under which certain corporations are entitled to earn an enhanced 35% refundable investment tax credit (ITC), to $6 million, retroactive to taxation years beginning after December 15, 2024, and confirm that changes to the SR&ED tax incentive program previously announced in the 2024 Fall Economic Statement (FES) that expand SR&ED ITC refundability and restore SR&ED eligibility for capital expenditures will proceed (see our Tax Insights “SR&ED updates: Enhanced credits, expanded eligibility and emerging opportunities”)
• expand the list of critical minerals eligible for the critical mineral exploration tax credit and the clean technology manufacturing ITC, and extend the availability of full ITC rates for carbon capture, utilization and storage expenditures by five years (to the end of 2035)
• significantly change Canada’s transfer pricing rules, effective for taxation years that begin after November 4, 2025 (see our Tax Insights “Bill C-15: Significant changes proposed to Canada’s transfer pricing rules”)

For more information, see our Tax Insights “2025 Federal Budget: Investing in Canada’s future.” 

Status: As at December 31, 2025, all of these key federal budget tax measures (except for the immediate expensing of M&P buildings) are included in Bill C-15 (see below), which was introduced in the House of Commons on November 18, 2025 (see Table 1 below for Bill C-15’s status), but none of the federal budget measures are considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Federal Bill C-15 (2025 federal budget and other measures)

Federal Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025, which includes the Notice of Ways and Means Motion tabled on November 17, 2025, received first reading on November 18, 2025. Bill C-15 implements:

• the key 2025 federal budget measures discussed above (except for the immediate expensing of M&P buildings), and includes the enhancements to the SR&ED tax incentive program announced in the federal 2024 FES 
• many federal 2024 FES and budget and other measures — other key tax measures in Bill C-15:

  • implement (or reinstate) various accelerated CCA measures (i.e. reinstating the Accelerated Investment Incentive on eligible depreciable property and immediate expensing for eligible M&P and specified clean energy equipment and zero-emission vehicles; introducing an accelerated CCA of 10% for new eligible purpose-built rental projects and immediate expensing for CCA class 44, 46 and 50 property)   
  • enhance the clean technology and clean technology manufacturing ITCs and introduce the clean electricity ITC
  • allow the Canada Revenue Agency to waive the withholding requirement, over a specified period, for payments to a non-resident service provider (i.e. the Regulation 105 withholding requirement) if certain conditions are met, upon royal assent of the enacting legislation
  • repeal the Digital Services Tax Act as of June 20, 2024 (the date of original enactment) 

For more information, see our Tax Insights “Bill C-15 implements SR&ED, capital cost allowance and transfer pricing changes and more.” 

Status: As at December 31, 2025, Bill C-15 is not considered substantively enacted for Canadian GAAP or enacted for US GAAP (see Table 1 below). 

Quebec Information Bulletin 2025-6

On October 10, 2025, Quebec’s Ministère des Finances released Information Bulletin 2025-6 “Adjustments to certain fiscal measures and harmonization with various federal fiscal measures regarding sales taxes.” Information Bulletin 2025-6 includes information that clarifies certain aspects of Quebec’s tax credit for research and development (R&D), innovation and pre-commercialization, specifically the nature of pre-commercialization activities.

Status: Legislation to implement Quebec’s tax credit for R&D, innovation and pre-commercialization is included in Bill 6 (see Table 1 below) and is considered substantively enacted for Canadian GAAP as of November 11, 2025 and enacted for US GAAP as of December 12, 2025.

Quebec Information Bulletin 2025-8

On November 25, 2025, Quebec’s Ministère des Finances released Information Bulletin 2025-8 “Fiscal measures announced in the Update on Québec’s Economic and Financial Situation and other measures.” For more information, see our Tax Insights “Update on Québec’s Economic and Financial Situation.”

Status: As at December 31, 2025, the measures implemented by Information Bulletin 2025-8 have not been tabled as a bill in the National Assembly of Québec and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Quebec’s Voluntary Disclosure Program

On December 18, 2025, Revenu Québec (RQ) announced changes to its voluntary disclosure program (VDP), which will apply to disclosure applications filed after December 17, 2025, as follows:

• to satisfy the requirement that the application be spontaneous, a taxpayer must now submit it before any audit or investigation has been initiated against them with respect to the information being disclosed (this includes audits or investigations conducted by any law enforcement agency, securities commission or federally or provincially regulated authorities)
• the “general program” and “limited program” categories have been eliminated and applications are classified according to whether they are “prompted” or “unprompted” applications 

Status: The interest and penalty relief offered through the VDP is administratively granted by RQ and does not require legislation to enact it. 

Trade tariffs and government support

United States President Donald Trump continues to issue executive orders that impose tariffs (or alter tariff rates) on certain goods imported from Canada. The Canadian government has responded with several retaliatory measures, which are modified as the situation evolves, and by providing government support to certain Canadian business sectors. For more information on the current tariff situation and to help your business assess and manage these tariffs, visit our Tariffs and Trade Policy Resource Centre.

Federal, provincial and territorial governments have announced measures intended to support Canadian businesses affected by the tariffs. For tariff-related support programs, see Tariff relief: Unlocking government support.

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Accounting updates — October 1 to December 31, 2025

There were no significant updates relating to the accounting for income tax.

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Federal and provincial/territorial bills 

Table 1 lists key bills that include corporate income tax rate changes or other income tax changes (e.g. for research and development) that were:

• tabled or received royal assent during 2025, or
• tabled before 2025, but did not receive royal assent before 2025

Table 1: Federal and provincial/territorial bills

Bolded rows indicate a change in status from October 1 to December 31, 2025.