Ontario Budget 2026

Ontario Budget 2026

Budget 2026 is in – and Counsel’s forecast was on the mark. Earlier this month, we shared our thoughts about the factors shaping the government’s fiscal approach. Today’s Budget confirms that outlook, which says less about our forecasting skills and more about the fact that budgets are about strategy, not surprises.

Today’s Budget is not a laundry list of new spending commitments. Facing dynamic, growing and unpredictable economic threats, the Ontario government is focused on reinforcing the resilience and competitiveness of Ontario’s economy while targeting new capital and operating investments in health, education, housing and other infrastructure.

This approach recognizes the pressures and risks on the horizon: global conflict, oil prices, cross border trade pressure and the looming renegotiation of the USMCA agreement. With a projected deficit of $13.8 billion and an affordability strain being felt by households across Ontario, the government is preparing itself for a difficult test of its fiscal plan.

Budget 2026 At A Glance

• GDP: estimated to have increased by 1.2%, up from 0.8% at the time of the 2025 Budget.
• Total Revenue: $226.6 billion, $6.7 billion higher than projected in the 2025 Budget, mainly reflecting an increase in tax revenue and higher net income from Government Business Enterprises and other non-tax revenue.
• Total Expenditure: $238.4 billion. Total expenses are projected to be $5.9 billion higher than the 2025 Budget forecast.
• Deficit: $13.8 billion in 2026-27, 77% higher than the $7.8 billion projected in the 2025 budget. It is projected to fall to $6.1 billion in 2027-28, followed by a projected surplus of $0.6 billion in 2028–29.
• Debt Numbers: Net debt-to-GDP ratio: 37.7% in 2026-27, down from 38.7% in the 2025 Fall Economic Statement.
• Employment Numbers: 7.4% unemployment, down from the projected 7.6% in the 2025 Fall Economic Statement.
• Employment advanced faster than expected, with the government noting that job gains were concentrated almost entirely in the private sector.

What Stands Out

1. Housing: Tax relief is on the way

In a budget with few major new announcements, the Ontario Government secured a major success on the eve of the Budget. Earlier this week, the Ontario and Federal governments announced that they had reached an agreement to fully remove the HST paid for new homes valued up to $1 million and no longer restrict this rebate to first-time home buyers.

• The maximum value of the rebate – up to $80,000 – will be maintained in full for homes up to $1.5 million, with a reduced rebate available for homes above that threshold.
• The expanded rebate was announced as a time-limited measure, and some details are still pending, but this is both a much hoped-for injection of stimulus to lift Ontario’s new housing starts and a win for the Ford government, which pushed the Federal government hard to come to the table on this commitment.

2. Health: Reinforcing frontline care.

• Health sector funding increased to $101 billion, continuing a multi-year upward trajectory. At the heart of the new funding is $1.1 billion in new funding for hospitals – a 4% increase – which aligns with sector requests and outpaces what the sector was advised to plan for.
• Ontario’s Primary Care Action Plan has received a further infusion of funding, being expanded by $325 million with a goal of connecting everyone in Ontario to a family doctor or primary care team by 2029, bringing the four-year investment to $3.4 billion.
• Home and community care funding increased by $1.1 billion.

3. Education: Stability under pressure.

• Education spending totals approximately $40.8 billion in 2026–27, maintaining education as the province’s second‑largest area of program expenditure.
• Per‑student funding up nearly 5% over two years, slightly ahead of inflation (~4% over the same period).
• An introduction of a $750 supply purchasing card for teachers, announced earlier this month.

4. Transportation and Infrastructure: The capital plan held.

• Major investment in infrastructure – including highways, hospitals, transit, and schools – remains a key part of the Ontario government’s plan to support jobs, economic growth, and long-term community resilience.
• Planned investments over 10 years are unchanged at more than $210 billion, including $37 billion in 2026–27.
• Focus areas include highways, hospitals, transit, and community infrastructure to support jobs, economic growth, and long-term community resilience.

A High Bar for New Spending

The story is not just where money was added, but what the pattern reveals. With continued pressure from visible service demand, global trade uncertainty, and the need to protect fiscal flexibility, the government concentrated its efforts on reinforcing internal capacity, service resilience, and strategically important economic sectors – such as critical minerals and nuclear energy – giving a clear sense of where it is prepared to spend and where it intends to hold the line.

This budget also shows that significant investments are plausible when the case is strong. Decisions like creating the Protect Ontario Account Investment Fund to attract major investment and supporting community organizations in managing rising operational costs point to a willingness to move where the initiative is well-articulated, politically aligned, and tied to broader government objectives. Aligning those three factors – with frank and informed insight – is what experienced and effective government relations professionals can bring to the table to help your organization engage successfully with government in this challenging environment.

The big lesson from Budget 2026? The bar for success is higher, and timing, framing, and credibility matter more than ever.