Quebec budget 2025-2026: A year under high economic pressure

On March 25, 2025, Minister of Finance Éric Girard officially presented the Quebec 2025–2026 budget. The government is determined to regain control of spending after a record $11 billion deficit the previous year.

For Prime Minister François Legault and his team, the situation is even more complex, since the high economic uncertainty linked to American tariff threats reduces growth prospects, even raising the specter of a recession in the coming months.

The return to a balanced budget will therefore not be achieved solely through wealth creation, and additional cuts are expected. While expectations were high for this important exercise, the Quebec government’s resources are more limited than ever.

The numbers say:

• Government spending is estimated at $165.8 billion.
• The projected revenues amount to $156.3 billion.
• The anticipated budget deficit for the 2025–2026 fiscal year is a record-breaking $13.6 billion, following a contribution to the Generations Fund;
• A balanced budget is forecasted for the fiscal year 2029–2030.

Economic forecast

With the budget presented today, Quebec is reducing its modest economic growth prospects for the next few years, mainly due to the international economic environment. Its economic growth is thus 1.1 per cent for 2025 and 1.4 per cent for 2026. Therefore, Quebec does not foresee a recession at this time, but recognizes that it is a possibility, as evidenced by the large contingency provision of $8.5 billion over five years.

Taxes

For individuals, the tax rates, like the QST, remain unchanged. However, this does not mean that taxpayers are spared: this fiscal year will see increases in rates and the realignment of some tax credits. This may hurt the introduction of an annual contribution for electric car owners and the abolition of the tax shield.

Businesses are not left behind: their tax rate remains unchanged, but the government is cleaning up some of the tax measures that have benefited many so far. It is ending the indexation of the corporate payroll tax eligibility threshold and refocusing the resource tax credit to support strategic and critical minerals.

Economy

The government plans to invest $4.1 billion to boost the Quebec economy in the context of tariff threats. Some of this money will be used for loans. It will also help businesses affected by U.S. tariffs, support investment projects, and diversify markets.

The Minister of Finance presented a brochure detailing innovative investment opportunities. It remains to be seen what the scope of these funds will be and what they will really offer Quebec businesses.

Health

An investment of $3.9 billion is planned to improve the delivery of health and social services. This funding will be used to improve access to care and services, strengthen social services for vulnerable people, ensure quality of life environments for seniors, and prioritize health prevention. These are, however, amounts that had already been largely announced.

Education

An investment of $1.1 billion is planned to support young people and students.

These funds will be used to improve educational success, increase support for young people and students, promote recreational and sporting activities, and facilitate access to childcare.

Optimization of the tax system

The government aims to save $3 billion over five years by revamping its tax system. This includes refocusing the resource tax credit on essential and crucial minerals, aligning insurance premiums and QST tax rates, and removing ineffective or underutilized tax breaks. However, it remains questionable whether these steps truly represent such substantial savings.

Infrastructure investments

To address the current economic uncertainty, the Quebec administration has boosted its Quebec Infrastructure Plan to $164 billion, a significant increase of more than $11 billion.

Preliminary analysis

Last year, the Minister of Finance, Éric Girard, warned that Quebec would face difficult decisions. This year’s budget reflects this cautious approach. On the economic side, the budget is marred by tariff threats from the Trump administration and past mistakes. The government chose to be cautious and postponed its budget for a few weeks to deal with the current uncertainty and changing data.

In the face of uncertainty at the border, the administration anticipates a modest economic expansion. Efforts to stimulate economic growth are scarce and instead concentrate on selective interventions to protect vital sectors. However, it remains to be seen whether these initiatives will be sufficient considering the significant obstacles facing the Quebec economy.

The fiscal situation is also precarious. Revenues are stagnant, and the government is struggling to control the deficit, which has reached a record $13.6 billion. Almost every department is grappling with reduced spending. Portfolio expenditure growth is thus limited to 1.8%, which is below the rate of inflation. Existing programs or measures that are considered either ineffective or too costly are abolished or redeveloped, resulting in initial savings.

Quebec’s government budget continues to rely heavily on federal transfer payments and equalization grants. The room for maneuvering is shrinking year by year, and the choices that have not been made this year will only make them more difficult next year. For more information on the 2025-2026 Quebec Budget, you can consult it online here. Please note that, in the event of a discrepancy with official documents from the Government of Quebec, these documents take precedence.