2026 Federal Spring Economic Update Highlights

On April 28, 2026, the federal government released its Spring Economic Update 2026, titled Canada Strong for All. The update outlines the government’s economic outlook and introduces a number of targeted measures focused on affordability, productivity, and long-term economic growth.

While not as comprehensive as a federal budget, the Spring Economic Update includes several tax measures and policy updates that may affect individuals and businesses across Canada. No changes to personal or corporate income tax rates were announced.

Below, we summarize some of the key tax and related measures that may be relevant to you and your business.

Personal tax measures

Canada Groceries and Essentials Benefit introduced

The government has introduced a new Canada Groceries and Essentials Benefit, replacing and enhancing the GST credit. The benefit will increase support by 25% for five years starting in July 2026. In addition, eligible individuals will receive a one-time top-up payment in June 2026 equal to a 50% increase of the 2025–26 GST credit.

A family of four may receive up to approximately $1,890 in 2026, with ongoing annual support of roughly $1,400 in next four years.

Temporary suspension of federal fuel excise tax

The federal fuel excise tax on gasoline, diesel, and aviation fuel will be temporarily suspended from April 20, 2026 to September 7, 2026. This measure is intended to provide short-term relief from fuel costs for individuals and businesses.

Home Buyers’ Plan extended

The government will extend the temporary five-year repayment grace period under the Home Buyers’ Plan for participants making a first withdrawal up to the end of 2028. The standard 15-year repayment period will begin in the fifth year following withdrawal.

Labour mobility deduction for tradespeople enhanced

Effective 2026, the maximum deduction for eligible temporary relocation expenses will increase from $4,000 to $10,000 per year, with indexation going forward. The distance requirement will also be modified so that temporary lodging must be at least 120 kilometres closer (rather than 150 kilometres closer) to the work location than the taxpayer’s ordinary residence.

Disability Tax Credit access expanded

The government will simplify access to the Disability Tax Credit by expanding the list of individuals and organizations that can certify eligibility and by streamlining the application process. These changes are intended to improve access to the credit and related federal benefits. This simplified process applies to Disability Tax Credit certifications issued for the 2026 and later taxation years.

Business tax measures

Employee ownership trust exemption made permanent

The Employee Ownership Trust (EOT) rules will be enhanced by making the existing $10 million capital gains exemption permanent. This measure supports business succession planning by facilitating the transfer of ownership to employees. One of the main benefits of the EOT is that the capital gains arising from this disposition are not subject to the Alternative Minimum Tax rules.

Previously, these rules were set to expire by December 31, 2026 so this is a welcome change for many.

Carbon capture tax credit expanded

The Carbon Capture, Utilization, and Storage (CCUS) investment tax credit will be expanded to include enhanced oil recovery projects. Credit rates vary by type of expenditure, with higher rates available for direct air capture equipment.

Accelerated capital cost allowance for LNG facilities

Accelerated capital cost allowance rates will be introduced for low-carbon liquefied natural gas facilities, including rates of up to 50% for eligible equipment and 10% for related buildings. This measure is intended to support investment in lower-emission energy infrastructure.

Alcohol excise duty relief extended

Relief on alcohol excise duties for Canadian breweries, distilleries, and wineries will be extended to help offset ongoing cost pressures in the sector.

Other tax and administrative measures

Canada Pension Plan contribution rate reduction

The base Canada Pension Plan contribution rate is expected to be reduced from 9.9% to 9.5% beginning January 1, 2027, providing modest savings for both employees and employers.

Financial crime enforcement enhanced

The update introduces a new Financial Crimes Agency to strengthen the federal government’s ability to investigate complex financial crimes and recover proceeds of crime.

Final thoughts

The 2026 Spring Economic Update introduces targeted tax measures and administrative changes focused on affordability, investment, and program efficiency. While no broad tax reform measures were announced, several updates may affect both individuals and businesses depending on their circumstances.

For a more detailed list of the tax measures and changes announced on April 28, visit the Government of Canada website. As additional guidance and legislation are released, further details may clarify how certain measures will be implemented. Contact your DMCL advisor if you have any questions about how these changes might affect you or your business.