Today, the Department of Finance Canada released its annual estimates of the fiscal cost of federal tax measures in the 2026 Report on Federal Tax Expenditures-Concepts, Estimates and Evaluations.
This year's report features additional measures announced in Budget 2025 to foster investment and growth. These include accelerated depreciation measures for manufacturing or processing buildings, as well as low-carbon liquefied natural gas facilities. It also reflects measures first announced in the 2024 Fall Economic Statement, such as the enhancement of the Scientific Research and Experimental Development Investment Tax Credit and the extension of the Accelerated Investment Incentive and immediate expensing measures. The report also covers measures aimed at providing support to households, such as the First-Time Home Buyers' GST Rebate and the Top-Up Tax Credit.
In addition to providing estimates and projections on the fiscal cost of federal tax expenditures, this annual publication also explains the approaches used in developing these estimates and projections, and provides detailed information on each tax expenditure. This provides greater transparency to Canadians, including on how these tax measures support key priorities, and contributes to informed dialogue on public policy.
The report also includes two analytical papers: (1) "GBA Plus: Analysis of the Federal Tax System and Income Distribution Across Diverse Population Groups in Canada"; and (2) "Evaluation of the Canada Child Benefit". The GBA Plus study confirms that the federal personal income tax system contributes to reducing market income disparities. The evaluation of the Canada Child Benefit finds that it has been effective in reducing child poverty and poverty among single-mother and two-parent families, and that it also increased spending on essentials such as food, shelter, clothing, and education.
