On February 27, 2025, President of Treasury Board and Minister of Finance Nate Horner presented Alberta’s 2025 budget. Amidst great economic uncertainty fueled in part by looming U.S. tariffs on imports from Canada, including oil and gas, this year’s fiscal plan forges ahead with a promised personal income tax cut—ostensibly to help Alberta residents with the rising cost of living. The budget also touts significant investments to continue restructuring the province’s healthcare system, address growing student enrolment, attract investment, promote economic development, and support vulnerable residents, community safety, and border security.
The budget forecasts a deficit of $5.2 billion for 2025–26, as well as deficits for the next two years—in stark contrast to the $2.4 billion surplus budgeted two years ago.
In addition to the personal income tax reduction, which will be achieved through the addition of a new 8% tax bracket for the first $60,000 of income, the government announced a few other interesting tax measures, as summarized below.
Property Tax Measure
This year’s budget includes an increase to the provincial portion of property tax bills, which are used to fund education. After freezing education property tax rates for last year, these rates will increase for 2025–26 from $2.56 to $2.72 per $1,000 of equalized assessed value for residential or farmland properties and from $3.76 to $4.00 per $1,000 for nonresidential properties. The government expects the education property tax requisition to grow from $2.7 billion last year to $3.1 billion this year, with the share of operating costs funded by the education property tax rising from 29.5% to 31.6%.
While the impact of this change on property tax rates in each city has not yet been determined, as the municipal portion of property tax rates is set independently by each municipality, it is expected that, in the largest cities, the rate of increase will be higher for residential properties. In both Calgary and Edmonton, owners of nonresidential properties pay a much higher rate of property tax to the municipality than to the province, so the impact of the education property tax increase on their overall tax bills will be somewhat muted.
Fuel Tax Measure
The government announced that, effective March 1, 2025, locomotive fuel tax rates will increase from 5.5 to 6.5 cents per litre.
Tobacco Tax Measures
Following up on the recommendations of the provincial working group established as part of last year’s budget to study the pervasiveness and impact of contraband tobacco, the government announced the following measures to address the issue in this year’s budget:
- A commitment to double the number of officers in the province’s Tobacco Enforcement Unit
- The introduction of new administrative penalties, which will be equal to three times the tax otherwise payable for the possession or sale of certain contraband tobacco products or the unauthorized possession of specified cigars
- New legislation to mandate reporting on contraband seizures to facilitate data collection and penalty enforcement
- An intention to work with other provinces and advocate for stronger federal action to improve enforcement initiatives throughout Canada
More Information
Further details on Alberta’s 2025 budget may be found on the province’s website.
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to contact Ryan TaxDirect® at 1.800.667.1600 or taxdirect@ryan.com.