The federal government’s Budget 2026 outlines new spending measures aimed at making life more affordable and encouraging business investment, including a tax incentive called the Productivity Mega Deduction. The budget also projects continued deficits, rising federal debt, and changes in tax revenues and debt-servicing costs over the coming years.
The following seven charts illustrate some of the budget’s key figures, including spending on affordability programs, projected tax revenues, federal debt and interest costs, and how the Productivity Mega Deduction is expected to reduce taxes on new business investments in different industries.
Budget 2026 shows baseline funding in 2026–27 of $31.2 billion for the Canada Child Benefit, the largest affordability program, followed by $20.5 billion for the Guaranteed Income Supplement, $11.1 billion for the Canada Groceries and Essentials Benefit, and $10.9 billion for Early Learning and Child Care. New measures over five years include $11.2 billion for an initiative to put Canada on the path to end homelessness, $4.1 billion added to the groceries and essentials benefit, and $2 billion for home retrofits and energy bill savings.
[mobile_embed_code][/mobile_embed_code]The Department of Finance estimates the Productivity Mega Deduction will lower the marginal effective tax rate, which measures the tax burden on the return from a new investment, from 13 percent to 6.4 percent across all industries, when compared with rates after the 2026 Spring Update. The rates would fall below zero in agriculture and fishing and in transportation and storage, meaning the tax system effectively subsidizes investment. Retail trade would have the highest rate after the deduction, at 19.3 percent.
The federal budget deficit was $61.9 billion in 2023–24 and $39.3 billion in 2025–26. Budget 2026 projects it will rise to $62.3 billion in 2026–27 and $62.5 billion in 2027–28, then narrow gradually to $52.9 billion in 2030–31.
Budget 2026 projects that personal income tax revenue will rise by about 25 percent from 2025–26 to 2030–31. Corporate income tax revenue is projected to fall about 4 percent. Revenue from the Goods and Services Tax is projected to rise from $51.8 billion to $65.1 billion, while customs import duties are projected to decline from $10.3 billion to $8.7 billion.
The Department of Finance’s Fiscal Reference Tables show that accumulated federal debt rose at an annual growth rate of 2.9 percent from 2010–11 to 2019–20. Budget 2026 projects an annual growth rate of 4.1 percent from 2025–26 to 2030–31.
Interest costs on the federal debt fell to $20.4 billion in 2020–21, then rose to $53.5 billion in 2025–26. Budget 2026 projects costs of $60.2 billion in 2026–27 and $85.5 billion in 2030–31.
[mobile_embed_code][/mobile_embed_code]The federal debt-to-GDP ratio rose from 31.2 percent in 2019–20 to a peak of 47.2 percent in 2020–21, then fell to 41.1 percent in 2022–23. The budget brief projects the ratio at 39.9 percent in 2026–27 and 40.1 percent in 2030–31.
