Ottawa dialled the projected 2025–26 federal deficit down from $78.3 billion to $66.9 billion in Tuesday’s spring economic update. The deficit for 2026 to 2030 remains in line with Budget 2025 estimates, falling to $57.7 billion in fiscal 2028–29 and $53.2 billion in fiscal 2030–31.
Measures announced in the update will add as much as $37.5 billion over six years beginning in 2025–26. That includes the $11.8 billion Canada Groceries and Essentials Benefit announced in January.
CPP contributions lowered
The government plans to reduce the Canada Pension Plan (CPP) contribution rate to 9.5% from 9.9%, effective Jan. 1, 2027.
For an employee earning $70,000 a year, that will save them and their employer around $133 each. Across Canada’s 16 million contributors, it will reduce total contributions by more than $3 billion a year.
A CPP actuarial report in December 2025 found that the lowest rate required to sustain the fund over the next 75 years was 69 basis points below the legislated rate.
The proposed 40-basis point reduction will “maintain a prudent financial buffer to protect the CPP against future economic and demographic risks, while providing meaningful contributions relief,” according to the update.
Home buyers’ plan grace period extended
Budget 2024 increased the home buyers’ plan grace period by three years for those who made their first withdrawals between 2022 and 2025. That meant those who made a withdrawal from their RRSP wouldn’t have to start repaying that amount until five years after their first withdrawal.
The government has proposed extending this measure to participants who made a withdrawal between 2026 and 2028.
While this provides cash flow relief of up to $4,000 per person per year for the three-year extension, the 15-year repayment period following the grace period remains unchanged.
Employee ownership trust exemption made permanent
In the 2023 fall economic statement, the federal government introduced a temporary employee ownership trust (EOT) measure for the 2024–26 tax years, to let employees buy a business over time.
EOTs exempt the first $10 million of a seller’s capital gain from tax, and allow the remaining capital gain to be spread over 10 years.
Ottawa wants to make this tax exemption permanent.
This government expects the measure to cost $205 million from the 2026–31 financial years. It will cost $10 million in 2026–27, rising to $80 by 2030–31 as awareness of the exemption grows.
EOTs could appeal to sellers who want to leave a legacy and do not need an immediate payout, or for entrepreneurs who have no suitable family to sell to or who fear that a third party may not preserve the business’ legacy.
Disability tax credit claims simplified
The government proposed several measures to make it easier to claim the disability tax credit (DTC). Last year, a Canada Revenue Agency report found that the DTC was underused and underclaimed.
To help more people apply for the DTC, the government said it intends to expand the list of medical practitioners who can certify eligibility. Physiotherapists, speech-language pathologists and occupational therapists will be able to certify more impairments under their scope of practice.
Ottawa also wants to reduce paperwork for medical practitioners by streamlining the application process for certain long-lasting medical conditions. For example, a medical practitioner would no longer need to detail how Alzheimer’s disease impacts a patient’s everyday life.
Another measure will recognize provincial and territorial public guardians and trustees as qualified to certify the DTC for adults in their care for property matters after a medical practitioner has assessed their mental impairment.
The government expects the changes to increase relief by $345 million over the next six years, starting at $6 million in 2025–26 and rising to $86 million annually by 2029–30. The spending includes the Canada Disability Benefit, Child Disability Benefit, grants and bonds for the registered disability savings plan and other benefits linked to the DTC.
The CRA will get $42.5 million in total over the 2026–31 financial years to ensure applications are processed in a timely manner.
Regulatory stability for stablecoins
The Stablecoin Act became law last month. The government will speak with federally regulated financial institutions and provincial regulators to learn how the sector plans to develop and use stablecoins and other tokenized assets to see if there needs to be further regulatory clarity.
“The focus would be on supporting innovation while maintaining financial stability, protecting consumers — including the context of insolvency of stablecoin issuers — and preserving regulatory integrity,” the government said in the update. Budget 2026 will outline the government’s next steps.
Blockchain can enable instant transactions around the clock across financial institutions, faster international transfers and business-to-business payments.
EI remains extended for some seasonal workers, premiums rising
The government extended regular employment insurance (EI) benefits for seasonal workers in 13 economic regions, by five weeks to a 45-week maximum in 2018. This measure was set to expire in October this year but is now extended until October 2028.
This measure is expected to cost $356 million between 2026 and 2031, with the bulk of it spent in three years: $121 million in 2027–28, $159 million in 2028–29 and $72 million in 2029–30.
EI premiums are expected to increase from 1.63% in 2026 to 1.64% in 2027. There will be a $220 million increase in total premium revenue in 2026–27, rising to $719 million in 2030–31.
Advance CRA rulings prioritized
Corporations want certainty on the tax treatment of large transactions before making them.
The CRA will prioritize requests for advance income tax rulings related to large-scale projects like housing and infrastructure to provide certainty.
Productivity-enhancing projects in critical sectors like clean economy investment tax credits will also get priority.