With continued political uncertainty and a rapidly changing geopolitical landscape, Premier Doug Ford’s Progressive Conservative government has been all-in on the message of “Protect Ontario.” This budget is an extension of that theme and the Ford government’s 2025 policy and legislative agenda.
As expected, and in alignment with other provincial 2026 budgets, Ontario’s deficit is larger than last projected, coming in at $13.8 billion, up $6 billion from the last fiscal update. Also aligning with other provincial governments, the Ontario government has decided now is not the time for austerity and has pressed on with select tax reductions, mostly targeted at small businesses, as well as continued capital infrastructure investments.
While there has been some mention of maintaining a path to a balanced budget, fiscal restraint is not the immediate priority. Ultimately, this culminates in today’s sizeable $244 billion plan to protect the province. Ahead of the budget, Finance Minister Peter Bethlenfelvy set this guiding principle out simply to those listening in the room:
Of course, I’d prefer to have a smaller deficit. I’d prefer to balance sooner, but we have to live in the world we’re in.
– Peter Bethlenfelvy, Finance Minister of Ontario
The focus remains on advancing measures, including further housing-related spending via the Build Ontario Fund; establishing the Protect Ontario Account Investment Fund; expanding skills development and retraining programs; tax relief and deferrals; expanding the HST rebate; banning the resale of event tickets above their original price; red tape reduction; supporting investment attraction; and additional funds in health for hospitals, as well as primary and home care.
The 2026 Ontario budget comes just a year after the PCs won a large majority government in the 2025 election. Premier Ford framed that election as seeking a mandate to address the ongoing U.S. tariff threat and enact measures to support affected workers, businesses, and industries, spur resource development, and, as much as possible, galvanize the province’s economy in the face of these pressures.
While the government continues to enjoy a lead in the polls, some support has returned to the Liberal Party of Ontario, which is re-emerging as the PCs’ primary challenger. The party is led by current interim leader John Fraser until a new leader is selected in November 2026.
Overall, the 2026 budget is an extension of the agenda outlined in 2025. Many of the announced measures build on existing policies and legislation: themes like providing continuity and predictability, reducing regulatory and red tape pressures, and encouraging reinvestment in Ontario. The extension comes as the government faces the reality of the longer-term economic pain from U.S. tariffs and trade policy volatility. Implementation of some of these policies is taking longer than originally expected, especially areas like Buy Ontario procurement, for which service providers and vendors are still awaiting directives.
Much like we are seeing across the country, provincial budgets and the success of these initiatives will depend on coordination across government, strategic investments, and, potentially most importantly, the Canada–U.S. trade relationship, particularly as we near the July 2026 review of the Canada–United States–Mexico Free Trade Agreement. In the current context, finance ministers of all political stripes will be paying close attention to any decisions or political movement that could offer a glimpse of predictability in their budgeting process; Ontario is no different.
The headlines
- Budget 2026-27 includes $244 billion in spending: $101.2 billion for health care, $40.8 billion for education and $14 billion for the post-secondary education sector.
- The financial outlook improves over the medium term, moving from a $13.8 billion deficit for the upcoming fiscal year towards a surplus of $0.6 billion in 2028-29.
- True to his word, the finance minister did not raise taxes, instead introducing a tax cut for small businesses among smaller cost of living rebates.
- Shifting trade patterns and economic uncertainty continue to guide Ontario’s funding decisions.
Debt, deficit and revenue
For the previous 2025-26 financial year, Budget 2026 actually revises the expected $14.6 billion deficit down to $12.3 billion. However, this fiscal room is taken up by the projected $13.7 billion deficit for 2026-27, which is up nearly 77 per cent from the $7.8 billion deficit projected a year ago. The government is expected a deficit of $6.1 billion in 2027–28, before planning for a surplus of $0.6 billion in 2028–29, including reserve and contingencies.
Ontario’s real GDP is projected to grow by 1.0 per cent in 2026 and growth is expected to pick up in the following years with increases of 1.7 per cent in 2027, 1.8 per cent in 2028 and 2.0 per cent in 2029.
Over the medium-term, the government is using the net debt-to-GDP ration as a fiscal anchor, aiming to keep it below 40 per cent. Net debt-to-GDP ratio is projected to be 37.7 per cent in 2026–27, 38.5 per cent in 2027–28 and declining to 38.2 per cent in 2028–29.
Interest and Other Debt Servicing Charges is forecast to be $16.0 billion in 2025–26, down from the 2025 Budget forecast of $16.2 billion. It is forecast to be $17.2 billion in 2026–27, $18.6 billion in 2027–28 and $19.7 billion in 2028–29. This means the servicing of debt remains the fourth largest cost to the province after health, education, and social services.
Opposition reaction
Ontario NDP
The Ontario NDP responded to the 2026 budget by framing it as a missed opportunity to address affordability pressures and service capacity at a time of economic uncertainty. Anchoring its critique in a “Budget Report Card,” the party argued the government failed tests related to cost of living, health care and education, housing supply, job creation, and fiscal responsibility. The Ontario NDP positioned the budget as reflecting a broader set of choices that, in its view, deprioritize core public services and long‑term resilience.
The Ontario NDP zeroed in on two figures: roughly $150 million in net program reductions in K–12 education and approximately $70 million in reduced funding for colleges and universities compared to the 2025 budget. While the government maintains that overall education spending continues to rise, the Ontario NDP is framing these year over year changes as cuts, particularly when viewed alongside recently announced reforms to OSAP and the lifting of the tuition freeze, which will allow regulated fee increases beginning in Fall 2026.
Affordability was the dominant lens in the Ontario NDP’s response, with particular emphasis on housing, education, and workforce supports as the structural drivers of household costs. The party linked funding reductions in housing programs, post‑secondary education, and job training to ongoing pressures on families, workers, and young people, while continuing to highlight persistent challenges in health care staffing and service delivery. This framing reinforces the NDP’s broader narrative that public investment is central to both affordability and economic competitiveness.
This budget response signals a continued focus on outcomes rather than funding allocations and will likely emphasize service backlogs, staffing levels and the broader labour market impacts as the year unfolds. Clients can expect sustained opposition attention on sectors affected by these funding reductions, particularly education, health care and housing. Overall, the party is positioning fiscal debates around perceived trade‑offs between short‑term restraint and long‑term social and economic resilience.
Ontario Liberals
In the lead up to the budget, the Ontario Liberal Party was presenting the case that budgets are about priorities and that the Ford government has failed to prioritize healthcare, youth employment, and education. In their initial response to the budget, the party continued highlighting these issues, stating that “if it doesn’t serve him (Ford), he won’t do it. In his post-budget comments, Interim Leader John Fraser pressed on the longevity of the government, stating after eight years in power the Ford Government is out of ideas.
There are no new measures in this budget that are going to help families with affordability and their daily costs … Doug Ford and this government are tired and adrift.
– John Fraser, Interim Ontario Liberal Party Leader
Fraser drew attention to the need for support for students through OSAP, support for hospitals, getting more homes built, and making groceries cheaper. With the Ontario Liberals currently in the very early days of its leadership race with no candidates officially declared, you can look to the would be field of leaders for extensive reaction as they seek to demonstrate their chops as critics of the Ford Government. Early indications suggest that would-be leadership candidates will attempt to define the budget as failing to meet the moment, particularly as it relates to cost of living and healthcare.
New investments
Economy and growth
Economic uncertainty remains high and the province is putting emphasis on programming that attracts investments, protects jobs, and promote long-term, resilient growth.
To support businesses the province is introducing the new Protect Ontario Account Investment Fund, a fund the province will invest up to $4 billion in to support to develop the “new economy” and strategic priorities such as AI, defence, advanced manufacturing, life sciences, and critical minerals. The province will initiate a competitive process to partner with an investment manager able to lead the fund.
Small businesses will receive support through Ontario’s Tax Action Plan which proposes to cut the small business CIT rate from 3.2 per cent to 2.2 per cent, effective July 1, 2026.
Aligning with the federal government, Ontario will begin allowing businesses to accelerate the income tax deduction for the cost of depreciable assets. These changes would allow immediate 100 per cent write offs for manufacturing and processing machinery, equipment, and buildings; greenhouse buildings; certain clean technology assets and zero-emission vehicles; productivity-enhancing assets; and capital expenditures for R&D. It would also allow for accelerated depreciation for liquefied natural gas equipment and related buildings; accelerated depreciation from 4 per cent to 10 per cent for purpose-built rental housing; and accelerated first-year deductions of up to three times the regular amount for most other depreciable assets.
Health and capital investments
To sustain the operations of established research programs, the government is investing $26 million over three years, starting in 2026–27, to maintain existing and planned levels of support for Ontario’s research institutes.
The Ontario Autism Program will receive $186 million of new funding, bringing the total envelope to $965 million for the 2026-27 fiscal year. It also includes the previously announced measures to bring total investment to the Primary Care Action Plan to $3.4 billion and investing over $1.1 billion in additional hospital funding.
An additional $325 million will be put towards further expanding primary care and connecting everyone in Ontario to a family doctor or primary care team by 2029, bringing the four-year investment to $3.4 billion.
$1.1 billion in additional hospital funding for 2026–27, which includes an up to 4 per cent increase in base and targeted hospital funding.
$1.1 billion over three years to support patients with more home and community care services.
Additional new commitments
- A promise of consultation to “strengthen protections for consumers who participate in rewards points programs.”
- Fieldwork on a feasibility study on the proposed Highway 401 tunnel will start in the spring.
- Exploring standardizing rideshare guidelines across the province.
- Proposed legislation to enable certain pension plans to offer a new option for retirees called a Variable Life Benefit.
- Legislative changes that would see municipal education property tax remittances sent directly to the Ministry of Education instead of being collected by municipalities, starting in 2028.
- $50 million over the next three years, starting in 2026–27, into Agricultural Research and Innovation Ontario (ARIO), which includes the $41 million investment announced in October 2025.
Previously announced measures included in Budget 2026
- Ontario, with support from the federal government, is temporarily removing the full 13% HST for buyers of new homes valued up to $1 million.
- Commitment to ban the resale of live event tickets for more than face value.
- $6.4 billion in additional funding for post-secondary education.
- $66 million annually in order to give elementary school homeroom teachers spending cards to allow them to buy up to $750 in classroom supplies.
Related links
- Ontario Budget 2026: A Plan to Protect Ontario (Government of Ontario)
- Highlights of the 2026 Budget (Government of Ontario)
- News Release: A Plan to Protect Ontario (Government of Ontario)
