Quebec Budget 2025-2026: innovation to withstand crises

At a time when Quebec - and Canada - are facing an unprecedented trade war with the United States, the Quebec government is betting on innovation and a major tax reform to support local businesses with its 2025-2026 budget, entitled Pour un Québec fort.

Underlying this crisis caused by the actions of our neighbors to the south, these measures, aimed at boosting the success of Quebec businesses, are also intended to increase government revenues and, ultimately, mitigate this fiscal year's substantial deficit - a symptom of another crisis: that of public finances.

In this summary of a budget with a strong focus 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 for the Quebec economy is transitional assistance in the form of loans, representing a considerable cash injection. The budget also provides for harmonization with the federal government of depreciation allowances for productivity-enhancing acquisitions.

Another major initiative is a $900 million envelope of direct aid, paid via the Economic Development Fund, to encourage automation, robotization, digital transformation and the integration of artificial intelligence into local businesses.

In addition, there is a strong commitment to diversifying export markets through a number of key measures, including increased support for ORPEXs (regional export promotion organizations)These include increased support for ORPEXs (regional export promotion organizations), deployment of the new Politique internationale du Québec, and reform of LOJIQ 's governance to improve mobility opportunities for young people.

These investments are in addition to those made byInvestissement Québec and the CDPQ to boost productivity and make strategic moves into new markets.

In terms of entrepreneurship, some details remain to be worked out concerning the implementation of the Plan PME 2025-2028, which will benefit from a reduced envelope of $44 million over three years - a clear reduction compared to the last PQE. The deployment of the new $200 million investment fund, which will replace Impulsion PME, will also have to be closely monitored.

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

This reform sends a clear message to companies that the government wants to simplify the process of accessing tax credits, in addition to broadening their scope for companies in the pre-commercialization phase. The CRIC is also the second measure in a simplified tax assistance regime that joins the Deduction for Innovation Commercialization Incentive (DICI), already in force since 2021, with the aim of encouraging the retention and valorization of IP assets.
Although this reform needs to pass the test of adoption by companies, the signal is positive. It aims to make R&D a real lever for catching up with other Canadian provinces in terms of innovation.

In addition to the CRIC, the e-business development tax credit (CDAE) has been renamed the ^CDAEIA, to encourage higher value-added IT activities and focus tax assistance in the IT field on artificial intelligence, and encourage its wider adoption by Quebec businesses.

The 2025-2026 budget also contains targeted measures for strategic sectors or to support key organizations.

Support for the Technum Québec innovation zone, although conditional on federal and private investment, marks our determination to position the province at the digital vanguard 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, via financial support for MILA, microelectronics and the battery industry reflect a clear vision: to strengthen the links between research, innovation and concrete economic spin-offs. Additional financial support has also been provided to Finance Montréal, in particular to raise the profile of sustainable finance initiatives.

A number of measures are aimed at bringing more automation into the government's own processes to improve the efficiency of public services, but it's questionable whether the public service will turn to external expertise after the recent setbacks at SAAQclic.

Finally, the budget also pays special attention to the regions, with investments in connectivity, the social economy, local economic development, forestry, tourism and sustainable agriculture. An envelope of $225 million will also be devoted to the implementation of a new Bio-Food Policy aimed at boosting the sector's productivity and stimulating innovation.

As for the Ministère de l'Économie, de l'Innovation et de l'Énergie (MEIE), the 2025-2026 budget reflects a summary reduction in the civil service, as do several other ministries.

But it is above all the decrease in financial transfers to NPOs that attracts attention: from $399 million to $257 million. The message is unequivocal for economic development NPOs: it's high time to review their business model and diversify their sources of revenue.

Other notable reductions in various program expenses :

• 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 young scientists and scientific culture: $25.9 M to $22.4 M
• Support for innovation research infrastructures: $11.7 M to $10.9 M

In its 2025-2026 budget, the Quebec government has clearly stated its economic priorities, despite limited financial resources: to drive innovation, support entrepreneurship and strengthen regional development. Several key measures are designed to create a more dynamic environment for businesses, particularly those operating in strategic sectors and cutting-edge technologies.

We'll be keeping a close eye on the implementation of the measures set out in this ambitious budget for savings and tax reform, especially as most of the amounts announced are scheduled for the (election) year 2026-2027.