Budget 2025-2026 of Quebec: Subsidies and tax credits for Quebec SMEs

Economic and budgetary context 2025-2026

Main programs and measures of support for businesses

• Emergency measures in the event of a tariff war: Aware of the risks posed by international trade tensions (in particular possible American tariffs), the government is planning a transitional aid plan of $4 billion over five years for businesses that would be affected​. This plan includes, among other things, the establishment of emergency loans ($400 million over 2 years) to support the liquidity of affected companies​. It also provides for the extension of accelerated investment depreciation measures until 2029-2034, in harmony with the federal government, so that companies can deduct their capital expenditures more quickly (representing tax support of $2.4 billion over five years)​. In other words, an SME that invests in new equipment or technologies will be able to continue benefiting from an enhanced tax deduction, reducing its short-term tax burden and encouraging investment.
• Support for investment projects and digitization: To stimulate the economy during this uncertain period, the budget allocates $900 million over 3 years to support the implementation of business investment projects through the Economic Development Fund (FDE) managed by Investissement Québec​. This envelope will be used to co-finance expansion, modernization or other strategic investment projects in companies. At the same time, the Quebec Digital Transformation Offensive, a program that helps SMEs adopt digital technologies (for example the integration of ERP solutions, e-commerce, automation, etc.), is extended for three years with an additional budget of $14 million​. SMEs can therefore continue to benefit from this digital offensive—often in the form of grants or support—to accelerate their technological shift and improve their productivity.
• Support for the workforce and exports: Still within the framework of the $4 billion plan, the government is renewing measures to strengthen skills and diversify the markets of businesses. An envelope of $122 million over 5 years thus extends the Construction Training Offensive to address shortages of specialized labor in this critical sector​. In addition, to encourage the internationalization of SMEs, an amount of $196 million over 5 years is devoted to the diversification of Quebec exports​. This support includes increased assistance to regional export promotion organizations (ORPEX) and Investissement Québec to accompany exporters, the financing of a strengthened Maritime Strategy ($150 million) and the deployment of the network of Quebec representations abroad ($30 million)​. Concretely, an SME wishing to explore new markets or reduce its dependence on the United States can benefit from additional advice, training and even financial support for its export efforts.
• Targeted tax relief and revisions to tax expenditures: The budget also makes adjustments to certain tax credits and tax expenditures in order to better target assistance or achieve savings. Overall, Quebec plans to reduce the cost of several tax measures by $3.0 billion over five years, of which $1.2 billion will come from changes affecting businesses​. Among the notable changes: the Tax Credit for the Development of E-Business (CDAE), widely used by IT and multimedia companies, will be tightened and refocused on artificial intelligence activities​. Eligibility criteria will be revised and, for large companies or subsidiaries of foreign corporations, the CDAE rate will be reduced (particularly regarding the refundable portion) gradually until 2028​​. In other words, this credit will now be more generous for AI-related projects (via a new “CDAE-ai” component) and less so for some IT services offered to foreign parent companies, with the aim of stimulating the growth of local expertise in artificial intelligence. Furthermore, the government is harmonizing the tax on insurance services with the QST by raising its rate from 9% to 9.975%​​, which will slightly increase the cost of insurance premiums for businesses as well as individuals. It is also ending certain measures deemed less effective, for example the additional deductions related to flow-through shares in the mining sector​. Finally, note a change that will affect growing SMEs: the payroll threshold entitling one to the reduced contribution rate to the Health Services Fund (HSF) will no longer be indexed and remains frozen at $7.8 million​. This means that with the increase in salaries over the years, more SMEs will exceed this fixed threshold and see their contribution rate increase, representing a fiscal tightening for employers​. The Canadian Federation of Independent Business (CFIB) has moreover deplored this tightening of the HSF, calling it “not good news” for small businesses​.
• New investment funds and growth capital: In addition to subsidies and credits, the budget relies on financing tools to support businesses. Notably, there is the creation of a new $200 million investment fund dedicated to the growth and commercialization of innovations by start-ups (startups)​. This fund, details of which will be revealed later, will replace the Investissement Québec PME Impulsion program. In fact, the government is transferring to this new fund the resources initially allocated to PME Impulsion and adding an envelope from the Quebec Strategy for Research and Investment in Innovation, bringing the total to $250 million​. The objective is to co-invest in innovative startups with high potential, in addition to private funding, in order to help them reach the commercialization stage of their innovations. For more established SMEs, other sources of capital continue to be supported: for example, the budget increases the annual maximum issuance of Capital régional et coopératif Desjardins (CRCD) shares to $170 million per year until 2029 (which will inject more capital into the regions), while reducing the generous tax credit granted to subscribing investors (rate dropping from 30% to 25%)​. This seeks to expand the financing pool available for regional businesses while rationalizing the fiscal cost of this program for the government.

Measures for innovation, digital transformation, sustainable development and internationalization of SMEs

1. Innovation and R&D: The budget allocates around $604 million over five years to increase Quebec’s capacity to innovate​. The centerpiece of this effort is the overhaul of the fiscal assistance system for innovation, with the introduction of the Research, Innovation and Commercialization Tax Credit (CRIC). This new tax credit replaces the old system of SR&ED credits and radically simplifies tax support for R&D by abolishing a multitude of existing measures deemed redundant or complex—eight old credits or deductions will be eliminated to keep only the CRIC (and the deduction for commercialization of innovations, DICI)​. The CRIC represents a fiscal investment of $2.4 billion over 5 years, i.e. an increased support of $271 million compared to the programs it replaces​. Its operation is designed to be simple and advantageous for all innovative businesses: a single rate of 30% applies to the first $1 million of annual eligible expenditures, regardless of company size, then a rate of 20% beyond that amount​. Above all, the CRIC will be fully refundable​, meaning that a startup or growing SME without taxable profits will be able to receive a check from the tax authorities corresponding to the credit, just as a profitable business can reduce its taxes. The CRIC covers scientific research and pre-commercial development expenditures, for example prototyping of new products, including the salaries of technical and scientific staff, 50% of subcontracting contracts (including partnerships with research centers or universities), as well as equipment and material costs related to the project. By centralizing support in this single credit, the government aims to maximize the impact of tax assistance on innovation while reducing administrative hassles for technology SMEs​. For businesses, this translates to easier and more generous access to R&D credit than before—by way of illustration, it is estimated that a $500,000 innovation project undertaken by an SME will receive about 17% more fiscal assistance with the CRIC than under the old system of incentives, and that a large $5 million project carried out by a major company will receive 90% more assistance compared to the old system​. In addition to the CRIC, the budget allocates targeted investments for innovation in strategic sectors: $101 million over 5 years will go to the development of the Technum Québec Innovation Zone (semiconductor sector)​, $54 million over 3 years to renew the Quebec Life Sciences Strategy (support for research and businesses in biotechnology, pharmaceuticals, etc.)​, $22 million to continue funding MILA (the Montreal artificial intelligence hub)​, and funds to support financial innovation (Finance Montréal) as well as collaborative research in the battery, microelectronics, aerospace sectors, etc.​. All these measures aim to create an ecosystem conducive to innovation: high-potential tech SMEs will benefit from improved tax support and operate in an environment where key initiatives (innovation zones, research centers, industrial clusters) are funded to accelerate the emergence of new technologies and their commercialization.
2. Digital transformation of SMEs: The digital transition remains a priority to increase the productivity of Quebec companies. The budget therefore extends the Digital Transformation Offensive for three additional years​ of support and grants to help SMEs in all sectors integrate digital technologies (automation, business intelligence, e-commerce, cloud management, etc.). The announced addition of $14 million in the budget guarantees the continuity of these aids until around 2028​. For example, a manufacturing company wishing to adopt robots or an ERP software will continue to be able to apply for financial assistance covering part of the costs and benefit from the expertise of digital transformation advisers through this extended program. At the same time, the government is also investing in its own internal digital transformation ($74 million over 5 years to automate State processes through AI, such as call centers​); although this is not a direct subsidy to SMEs, modernizing the public sector can eventually facilitate companies’ interactions with the administration (online permits, single window, etc.). The message for SMEs is clear: whether through the Digital Transformation Offensive or through investment tax credits (such as the existing C3i) and accelerated depreciation, there is support available to those undertaking a technological and digital shift. Not taking advantage of these tools could mean falling behind competitors who automate and innovate faster.
3. Sustainable development and green economy: Although the 2025-2026 budget does not present a chapter specifically titled “SMEs and sustainable development,” several measures aim to encourage more sustainable economic growth, some of which may affect businesses. For instance, an amount of $202 million over 5 years is planned for the Sustainable Agriculture Plan and the Biofood Policy​, to support agricultural businesses in adopting ecological practices (better soil management, reduction of inputs, etc.). Indirectly, this affects agri-food SMEs that may obtain grants for innovative projects reducing their environmental footprint. The budget also announces the creation of the Sustainable Growth Investment Program​, which could provide financing to business projects aligned with green growth objectives (this program should be monitored when its details are released). In the manufacturing sector, $52 million over 3 years is allocated to the “Innovation Bois” initiative and to a Wood Transformation Expertise Center, to stimulate innovation in an industry key to sustainable development (value-added wood products, carbon neutrality in construction, etc.). Furthermore, the government is renewing its efforts to develop critical and strategic minerals (CSMs) needed for the energy transition (batteries, electric vehicles): $88 million over 5 years is invested in a plan to enhance CSMs​, and the tax credit related to natural resources (CIRR) is doubled (rates increased to 20-45%) until 2030 for projects to develop these strategic minerals​. SMEs involved in clean energy supply chains, recycling or the circular economy can thus expect increased support either through tax credits or through dedicated programs. Finally, let’s highlight the extension of the Roulez Vert program for the year 2025-2026, which offers rebates of $500 to $4,000 for the purchase of electric or hybrid vehicles​—a measure that, although primarily aimed at individuals, can also encourage small businesses to green their vehicle fleets. In short, whether it is grants for green projects, tax credits for clean technologies, or sectoral programs (agriculture, forestry, clean mining), the budget aligns with the objective of more sustainable economic development. SMEs that innovate in eco-efficiency or green technologies should find several financing opportunities in the government system to support their eco-responsible initiatives.
4. Export and internationalization: Access to international markets is an important growth lever for many Quebec SMEs, and the budget contains measures to encourage them to export more. Apart from the $196 million envelope mentioned above for market diversification (support for ORPEX, maritime strategy, foreign delegations)​, we note the continuation of Quebec’s Economic Diplomacy Offensive. The network of Quebec delegations and offices abroad will be strengthened, helping companies identify opportunities in new countries and establish local contacts. The emphasis on the maritime strategy aims to develop exports by sea and better exploit the logistical potential of the St. Lawrence—sectors such as agri-food, wood, minerals or even manufacturing could benefit from reduced logistical costs or new export routes. For SMEs, venturing into exports entails costs and risks; that is why, in addition to provincial measures, one must not forget the existence of federal programs such as CanExport SMEs, which subsidizes expenses related to exploring new markets (travel, market studies, international marketing). The current economic context—trade uncertainties, need for diversification away from the United States—makes these programs even more relevant​. For example, CanExport SMEs covers up to 50% of eligible expenses (on a maximum budget of around $100,000) to help a company develop internationally. Thus, a services or tech products SME wishing to establish itself in Europe or Asia could have part of its export efforts financed through this federal program. Moreover, the Quebec budget plans to make it easier for buyers to identify local products (with the aim of stimulating domestic demand for Quebec products): an amount of $4.5 million over 2 years is allocated to the organization Les Produits du Québec, which promotes local purchasing. This initiative can indirectly help small manufacturing or agri-food businesses gain visibility in the Quebec market and build loyalty among a clientele sensitive to the local origin of goods.

The SME Plan 2025-2028, the new CRIC and the taxation of established businesses

• SME Plan 2025-2028: an integrated vision for SME growth. Announced in the budget with a modest envelope of $42.3 million over three years for its deployment, the SME Plan 2025-2028 reflects the government’s desire to provide a strategic boost to SMEs in all regions. The main idea is to offer a single entry point for SMEs to the existing resources and support services, and to coordinate the actions of the government and its partners to better assist these businesses. The details of the SME Plan will be disclosed later, but the budget outlines its main directions: it will propose an integrated and common vision of all the programs and measures of support for SMEs, focusing on several key areas​. According to the Ministry of the Economy, this SME Plan will aim in particular to:
  • Provide a single “entry point” in each region for entrepreneurs, so that they know where to turn for information and assistance, without having to navigate through a myriad of separate organizations and programs​. This administrative simplification measure was expected, as many SME managers find the current support ecosystem (CLD, PME MTL, ministries, etc.) complex. A unified service window should make access to subsidies and services simpler and faster.
  • Accompany SMEs in their innovation projects: whether developing a new product, adopting a technology or improving a process, the SME Plan will seek to equip innovative businesses by facilitating access to programs such as the CRIC, to research centers, to expert advisers, etc. We can expect that specialized advisers will be mobilized to guide innovative SMEs toward the right resources (for example, directing them to available tax credits, to programs like Innovécan or TechnoClimat if they are relevant, etc.).
  • Support entrepreneurs at every stage of development: from startup to growth, including business transfer, the SME Plan aims to strengthen the continuum of support. This includes business succession, i.e., the purchase/takeover of existing companies, a major issue given the aging of many owner-managers in Quebec​. Measures to encourage and finance entrepreneurial succession could be part of the Plan (for example, loans or guarantees for buyers, or tax relief in the case of transferring a family SME).
  • Increase the competitiveness and productivity of SMEs: this aspect overlaps with innovation and digital support, but can also include export support or process improvement (e.g., adoption of artificial intelligence, robotics, workforce training). The goal is to help established SMEs grow and compete with the best in their industry.
  • Reduce administrative burden: paperwork and regulatory obligations weigh proportionally more heavily on small organizations. The government intends to continue efforts to simplify (permits, forms, reports) to save time and money for SMEs​. This echoes certain announcements in recent years (such as setting up a modernized Enterprise Register service, or simplifying CNESST declarations, etc.), and the CFIB has welcomed this priority to reduce bureaucracy.

• R&D tax credits: from SR&ED to the new CRIC. For innovative companies, the reform of R&D tax incentives is undoubtedly the most significant change in this budget. As explained previously, the new Research, Innovation and Commercialization Tax Credit (CRIC) will eventually replace the old Quebec SR&ED system, as well as several other innovation-related tax credits. This simplification is welcome, as the current system was considered too complex, with a multiplicity of measures having different criteria, which discouraged some SMEs from claiming them. With the CRIC, starting next year, a business will essentially have only one measure to consider for its research and innovation projects. Let us recall the CRIC features relevant for an established SME:
  • A 30% refundable rate on the first $1 million of eligible expenditures per year, then 20% on the excess​. This ensures that small and medium-sized enterprises (which rarely spend more than a million a year on in-house R&D) will get the maximum rate for all of their research activities. By comparison, in the old system, the rate varied according to the size of the company and the type of expense, and large companies had much lower rates. Henceforth, SMEs and large companies will have the same base rate on the first bracket, which simplifies matters. The fact that the credit is fully refundable means that an SME in a development phase can recover that 30% in cash even if it does not yet pay corporate tax—this is crucial to supporting the cash flow of young technology businesses.
  • Broadened eligible expenditures: the CRIC will cover not only R&D salaries and part of outsourced research contracts (50% of their value) as before, but also equipment expenditures related to R&D​. This is a notable novelty, because investing in laboratory equipment, prototype machines or expensive software was until now less well supported fiscally in Quebec. From now on, if your SME buys a test bench, an industrial 3D printer or any other equipment for developing a new product, 30% of that expense can be recovered through the CRIC (up to the overall first million cap). This will encourage tangible investments needed to innovate.
  • Condition of presence in Quebec: it should be noted that, to be eligible for the CRIC, the company must operate an establishment in Quebec​. This aims to ensure that tax assistance benefits companies with an actual presence in the province (employees, facilities), not just entities with no local presence that would outsource R&D. For the vast majority of Quebec SMEs, this condition is naturally met.
  • Impact for established businesses: if your SME was already benefiting from SR&ED credits, you will need to prepare for this transition to the CRIC. The good news is that overall support does not decrease—on the contrary, the Ministry of Finance indicates that the CRIC will offer more assistance than before for most projects, especially for large companies (which found their provincial R&D credits very capped)​. For SMEs, the main advantage will be simplicity: a single generous and uniform rate, more eligible expenses, fewer multiple forms. It will be important to update your tax strategies and your R&D project tracking to maximize use of the CRIC as soon as it comes into effect (fiscal year 2024 or 2025 according to the schedule specified by Quebec). Also, with the planned end of some old measures, make sure to finalize projects benefiting from these credits or check the transitional provisions. For example, if you had a credit for “industrial design” or something else, see until when applications can be submitted before it disappears.
• Other fiscal and regulatory measures for established businesses. Beyond direct aids and the CRIC, the budget contains other elements that will affect the business climate of SMEs already well established:
  • As mentioned, freezing the Health Services Fund (HSF) threshold at $7.8 million in payroll means that rapidly growing SMEs could sooner reach the full HSF contribution rate (around 4% on excess payroll). This equates to a gradual increase in tax burden for those who hire a lot or significantly raise salaries. You will need to factor this into your labor cost forecasts.
  • No reduction in corporate income tax was announced in this budget. The SME tax rate in Quebec remains at 3.2% on the first bracket of income (hence the importance of tax credits to reduce the tax bill in other ways). The CFIB points out that Quebec remains, despite the aids, one of the provinces where the overall tax burden on SMEs is the heaviest when taking into account income tax, payroll taxes and other fees.
  • The government reiterates its intention to tackle excessive paperwork. Although this does not appear as a quantified measure, it is likely that regulatory simplifications will materialize (e.g., extension of the program to reduce administrative formalities by 10% by 2025, modernization of online platforms to declare and pay various dues, etc.). Established businesses could thus gain some respite from administrative tasks in the coming years.

Examples of financing and support opportunities to explore

• Tax credits for innovation and digital transformation: With the arrival of the CRIC, SMEs have every interest in maximizing their innovation projects. helloDarwin regularly publishes content to help you understand and claim these credits. For example, a Complete Guide to Innovation Grants and Credits 2024 (and soon 2025) there details the various available tax aids and strategies to make the most of them. If your SME is planning an R&D or automation project, you can consult these guides and even contact specialized consultants through helloDarwin to prepare your tax credit applications. Tip: By combining the new CRIC with other programs (such as the federal NRC IRAP program for direct R&D funding), it is often possible to finance a substantial portion of a technological project. Experts listed on helloDarwin can assist you with assembling this funding package and ensure eligibility criteria are met.
• Financing programs for SME growth: The budget mentions the future $250 million investment fund for innovative young companies, which will take over from the Impulsion SME program. While waiting for its launch, you can learn about how Impulsion PME worked (which was managed by Investissement Québec) to understand the kind of financing offered. helloDarwin provides an Impulsion PME – Applicant’s Guide 2025 listing the eligibility criteria and conditions (co-investment, minimum and maximum amounts, etc.) of this program. For example, Impulsion PME financed up to 50% of the financial package of an innovative startup, in the form of quasi-equity investment, for amounts ranging from $250,000 to $1,000,000 (or even $2,000,000 for the biopharmaceutical sector). The promised new fund should have similar terms, injecting capital into high-potential businesses alongside private investors. If you are a young startup with an innovative project, keep track of updates on helloDarwin about this new fund—you may find information as soon as the criteria are announced, as well as contacts to help you prepare your application. For more mature SMEs seeking growth financing, remember tools like Investissement Québec loans, ESSOR program grants (for major investment projects), or even regional funds (e.g., the PME MTL fund in the Montreal region). The PME MTL Fund can lend up to $300,000 at a preferential rate to support the acquisition of equipment or the expansion of an SME, with an emphasis on innovation, energy efficiency or digital transformation​. It is a financing source to consider for Montreal-based businesses, while other regions have equivalent arrangements.
• Export and internationalization assistance: If one of your goals is to develop new markets outside Quebec, several programs can help you. We mentioned the federal CanExport SMEs program, which is very popular. Also, through the helloDarwin platform, you can connect with international trade consulting firms that help prepare CanExport applications and, more broadly, build your export strategy.
• Subsidies in innovation and sustainable development: For projects related to the green economy or high technology, consider specialized programs. For example, the Technoclimat program (from the Ministry of Energy and Natural Resources) offers financial support for innovative projects in energy efficiency, electrification or GHG reduction. Similarly, the Innov-R program funds R&D consortia in environmental fields.