On April 10, 2025, Minister of Finance and Chair of Treasury Board Jill Burridge presented Prince Edward Island’s 2025–26 budget. Building on initiatives announced in previous budgets, significant investments are planned to improve the province’s healthcare and education systems, address affordability issues, and strengthen communities. Forecasting a record deficit of approximately $184 million, the budget also proposes measures to support workers and promote economic growth amidst mounting economic uncertainty.
This year’s budget also contains several noteworthy tax changes, as summarized below.
Corporate Income Tax Measures
Corporate Income Tax Rate Cut
The province intends to lower its corporate income tax rate by 1% to an overall rate of 15%, beginning on July 1, 2025.
Small Business Threshold Increase
This year’s budget also proposes to raise the small business tax rate threshold by $100,000, effective July 1, 2025, bringing it up to a ceiling of $600,000.
Tobacco Tax Measure
The province is proposing to increase the tobacco tax rate on cigarettes from 29.52 cents to 30 cents per cigarette, effective April 28, 2025.
Personal Income Tax Measures
Following a similar personal income tax system change announced in last year’s budget, the province has announced that it will further increase the basic personal amount for each of the next two years, raising it to $14,650 for 2025 and $15,000 for 2026. The spouse or equivalent maximum amount and income threshold, as well as the low-income tax reduction threshold, will also be increased for those taxation years.
In addition, this year’s budget proposes to further raise each of the provincial tax bracket threshold amounts by 1.8% for 2026.
Property Tax Measure
Effective April 28, 2025, the province intends to increase its real property transfer tax rate to 2% for all transfers valued at $1 million or more, including transfers for first-time homebuyers who are residents of the province (which are currently subject to a preferential rate). Both the general rate and preferential rate will remain unchanged at 1% and 0%, respectively, for transfers valued at under $1 million.
Potential Impact of Tariffs
This year’s budget includes two contingency funds to mitigate the potential impact of tariffs introduced by the United States. A $32 million Tariff and Trade Contingency Fund will be established to provide direct support to affected workers and businesses, and a $10 million Tariff Working Capital Program will be put in place to provide liquidity and financial support.
More Information
Further information on Prince Edward Island’s 2025 budget may be found on the province's website.
For significant tax changes announced in other Canadian provincial and territorial budgets, please visit our Key Changes | 2025 Canadian Federal and Provincial Budgets page.
If you have any questions about how changes proposed in recent Canadian budgets might impact your organization, please do not hesitate to contact Ryan TaxDirect® at 1.800.667.1600 or taxdirect@ryan.com.
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