Ontario's 2025 Budget: What It Means For Private Business Owners

On May 15, 2025, Ontario's Finance Minister released the provincial budget under the theme"A Plan to Protect Ontario."While the budget does not introduce sweeping new taxes or incentives, it emphasizes cost reduction, strategic investment, and economic resilience amid global trade uncertainty. Read below for a breakdown of what private business owners need to know.

1. No Change in Income Tax Rates

Thegeneral (11.5%) and small business (3.2% on the first $500,000 of active business income)corporate tax rates remain unchanged.The personal income tax rates also do not change.

2. Tax Deferral Measures for Liquidity Support

Ontario is allowing eligible businesses todefer payments for select provincially administered taxesfromApril 1 to October 1, 2025, without interest or penalties. Note:tax filings must still be submitted on time.

Taxes eligible for deferred payment include:

• Employer Health Tax

• Insurance Premium Tax

• Gasoline Tax, Fuel Tax, and the International Fuel Tax Agreement

• Mining Tax

• Tobacco Tax

• Beer, Wine, and Spirits Tax

• Race Tracks Tax

• Retail Sales Tax on insurance contracts and benefit plans

3. Expanded Ontario Made Manufacturing Investment Tax Credit (OMMITC)

The Ontario government is proposing to significantlyenhance and expand the OMMITC,a refundable tax credit for Canadian-controlled private corporations,to stimulate capital investment:

• Thecredit rate istemporarilyincreased to 15%(from 10%) for eligible capital investments up to $20 million per year.

• Applies tomachinery, equipment, and buildingsacquired betweenMay 15, 2025, and December 31, 2029.

• Now available tonon-Canadian controlled private corporationswith a permanent Ontario presence as a non-refundable tax credit.

Recapture provisions apply if assets are sold or moved out of province within five years.

Other Updates for Business Owners

• TheProtecting Ontario Account, a new $5 billion fund, will provide emergency liquidity relief to Ontario businesses facing tariff-related disruptions. It is intended to protect jobs and support business transformation and sectoral growth where other funding sources have been exhausted.

• WSIB premium rate reductions and rebates.In 2025, $4 billion in surplus WSIB funds will be returned to safe employers. The average premium rate for Ontario businesses in 2025 will be lowered to $1.25 per $100 of insurable payroll.

• Fuel tax cuts of 9 cents/litreon gasoline and diesel are now permanent, andpropane used in licensed road vehicleswill be tax-exempt as of July 1, 2025.

• Alcohol tax and markup reductionstake effect August 1, 2025, slashing rates on spirits, beer, cider, and ready-to-drink beverages sold by microbrewers and the LCBO.

Final Thoughts

While the 2025 Ontario Budget does not introduce revolutionary tax reforms, it quietly deliverssubstantial cost savings, capital investment incentives, and regional growth support. For private businesses, especially those in manufacturing or hospitality, there are strategic opportunities toleverage tax credits and defermentsfor expansion or reinvestment.

Bateman MacKay LLP can help assess how your business can benefit.Contact us todayto start planning.

Frequently Asked Questions

Q1: What are the Ontario corporate tax rates in 2025?
A: Ontario's general rate remains at 11.5%, while the small business rate is 3.2% on the first $500,000 of active business income.

Q2: Can Ontario businesses defer tax payments in 2025?
A: Yes. Payments for select provincial taxes can be deferred from April 1 to October 1, 2025, without interest or penalties. However, filings are still required on schedule.

Q3: What's new in the Ontario Made Manufacturing Investment Tax Credit?
A: The credit is enhanced to 15% for eligible capital investments and expanded to non-CCPCs with Ontario operations. It applies to purchases made between May 15, 2025, and December 31, 2029.

Q4: How does the 2025 Ontario Budget support small businesses?
A: Through tax deferrals, lower fuel and energy costs, enhanced tax credits for capital investment, and permanent fuel tax reductions, the budget targets cost competitiveness and business growth.

Q5: What is the Protecting Ontario Account and how can businesses access it?
A:The Protecting Ontario Account is a newly established $5 billion emergency fund designed to providecritical liquidity relieffor businesses facing significanttariff-related disruptions. It aims to protect jobs, enable business transformation, and support growth in strategic sectors. This fund is specifically targeted at businesses that havealready exhausted existing funding avenues. Details on eligibility and application processes are expected to follow in upcoming regulatory guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.