Quebec’s 2025–2026 Budget: Focusing on Innovation to Weather Crises

As Quebec—and Canada—face an unprecedented trade war with the United States, the Quebec government is banking on innovation and a major tax reform to support local businesses through its 2025–2026 budget, titled*For a Strong Quebec*.

Against the backdrop of this crisis triggered by the actions of our southern neighbors, these measures—which aim to boost the success of Quebec businesses—are also intended to increase government revenue and, ultimately, to reduce the significant deficit for this fiscal year—a symptom of another crisis: that of public finances.

In this summary of a budget strongly focused on the economy and innovation, here are four key elements that will have a direct impact on innovative entrepreneurship in Quebec.

The main measure underpinning the $5.4 billion investment in Quebec’s economy involves transitional assistance provided in the form of loans, which represents a significant injection of liquidity. The budget also provides for the harmonization with federal depreciation rules for acquisitions that improve business productivity.

Another major initiative: a $900 million package of direct aid, provided through the Economic Development Fund, to promote automation, robotization, digital transformation, and the integration of artificial intelligence into local businesses.

In addition, there is a clear commitment to diversifying export markets through several key measures, including increased support for ORPEX (regional export promotion agencies), the implementation of Quebec’s new International Policy, and a reform of LOJIQ’s governance to improve mobility opportunities for young people.

These investments complement the initiatives undertaken byInvestissement Québec and the CDPQ to boost productivity or make strategic pivots toward new markets.

When it comes to entrepreneurship, certain details still need to be clarified regarding the implementation of the 2025–2028 SME Plan, which will have a reduced budget of 44 million over three years—a significant decrease compared to the last PQE. We will also need to closely monitor the rollout of the new $200 million investment fund, which will replace Impulsion PME.

Beyond support for businesses affected by the trade war, the most significant measure in terms of innovation is the elimination of eight tax credits related to research, development, and innovation, in favor of a new unified tax credit: the Tax Credit for Research, Innovation, and Commercialization (CRIC). This reform is based on the recommendations of the Quebec Innovation Council.

This reform sends a clear message to businesses that the government wants to simplify the process for accessing tax credits and expand their scope to include companies in the pre-commercialization phase. The CRIC is also the second measure in a simplified tax incentive program that complements the Incentive Deduction for the Commercialization of Innovations (DICI), which has been in effect since 2021, with the goal of encouraging the retention and commercialization of IP assets.
Although this reform must still be adopted by businesses, the signal is positive. It aims to make R&D a real driver for closing the innovation gap between Quebec and other Canadian provinces.

In addition to the CRIC, a major change is coming to the tax credit for the development of e-business (CDAE), which will become the^CDAEIA in order to encourage higher-value-added IT activities, focus tax incentives in the IT sector on artificial intelligence, and promote its wider adoption by Quebec businesses.

The 2025–2026 budget also includes targeted measures for strategic sectors and to support key organizations

Support for the Technum Québec innovation zone—although contingent on federal and private investment—demonstrates the province’s commitment to positioning itself at the forefront of digital technology in the key sectors of microelectronics and its applications in aerospace and advanced manufacturing. Similarly, the renewal of the Quebec Life Sciences Strategy and support for collaborative research in sectors such as artificial intelligence—through financial support for MILA—microelectronics, and the battery industry reflect a clear vision: to strengthen the links between research, innovation, and tangible economic benefits. Also worth noting is additional financial support for Finance Montréal, particularly to increase the visibility of initiatives promoting sustainable finance.

Several measures are aimed at introducing more automation into the government’s own processes to improve the efficiency of public services, but it remains to be seen whether the civil service will turn to outside expertise following the recent setbacks with SAAQclic.

Finally, the budget also places special emphasis on the regions through investments in connectivity, the social economy, local economic development, forestry, tourism, and sustainable agriculture. A budget of $225 million will also be allocated to the implementation of a new Agri-Food Policy aimed at increasing the sector’s productivity and stimulating innovation.

As for the Ministry of Economy, Innovation, and Energy (MEIE), the 2025–2026 budget reflects an overall reduction in the civil service, as is the case with several other ministries.

But it is above all the decline in financial transfers to nonprofits that is drawing attention: these transfers have fallen from $399 million to $257 million. The message is clear for economic development NPOs: it is high time to reevaluate their business models and diversify their revenue streams.

Other notable reductions in various program expenditures:

• Regional Economic Development and Entrepreneurship: from $256 million in 2023–2024 to $153 million in 2025–2026.
• Support for organizations and projects: from $202 million to $155.8 million between 2024–2025 and 2025–2026
• Support for the next generation and scientific culture: $25.9 million to $22.4 million
• Support for research and innovation infrastructure: $11.7 million to $10.9 million

In its 2025–2026 budget, the Government of Quebec clearly sets out its economic priorities, despite its limited financial resources: driving innovation, supporting entrepreneurship, and strengthening regional development. Several key measures aim to create a more dynamic environment for businesses, particularly those operating in strategic sectors and cutting-edge technologies.

We will be closely monitoring the implementation of the measures outlined in this ambitious budget regarding economic policy and tax reform, especially since most of the announced amounts are scheduled for the (election) year 2026–2027.