Bill 12, Cutting Taxes on Small Businesses Act, 2025
Chamber
ontario
Stage
Introduced
This Ontario bill raises the small business tax deduction rate and increases the income limit eligible for that deduction.
Key Changes
- Increases the Ontario small business deduction rate from 8.3% to 9.9% starting January 1, 2026
- Raises the business income limit eligible for the small business deduction from $500,000 to $600,000
- Updates the surtax calculation formula to reflect the new $600,000 business limit
- Includes a transitional rate formula to proportionally apply the old and new rates in years that straddle the January 1, 2026 start date
Gotchas
- The bill is currently at First Reading only and has not yet become law.
- If Royal Assent is granted after January 1, 2026, the law is deemed to have come into force retroactively on that date.
- The transitional formula ensures businesses are not double-taxed or under-taxed in a fiscal year that spans both the old and new rules.
- The fiscal impact (reduced tax revenue for Ontario) is not specified in the bill text.
- This is a provincial bill affecting only Ontario's portion of small business taxation; federal small business deduction rules are separate and unchanged by this bill.
Who's Affected
- Small businesses operating in Ontario
- Canadian-controlled private corporations (CCPCs) earning active business income in Ontario
- Business owners and entrepreneurs in Ontario
- Ontario provincial tax revenue
Vibes
0 responses
Gotchas
- The bill is currently at First Reading only and has not yet become law.
- If Royal Assent is granted after January 1, 2026, the law is deemed to have come into force retroactively on that date.
- The transitional formula ensures businesses are not double-taxed or under-taxed in a fiscal year that spans both the old and new rules.
- The fiscal impact (reduced tax revenue for Ontario) is not specified in the bill text.
- This is a provincial bill affecting only Ontario's portion of small business taxation; federal small business deduction rules are separate and unchanged by this bill.
Summary
Bill 12 amends Ontario's Taxation Act, 2007 to give small businesses a bigger tax break starting January 1, 2026. It does two main things: it raises the Ontario small business deduction rate from 8.3% to 9.9%, and it increases the amount of business income that qualifies for that lower tax rate from $500,000 to $600,000 per year. This means small businesses in Ontario will pay less provincial tax on a larger portion of their income. For example, a business earning up to $600,000 (instead of the current $500,000) would benefit from the reduced tax rate, potentially saving thousands of dollars annually. The bill was introduced to reduce the tax burden on small businesses in Ontario, likely to support their growth and competitiveness. It was introduced by MPP Stephanie Bowman and is currently at First Reading in the Legislative Assembly.
Automatically generated from bill text using Claude
Vibes
0 responses