Ontario Businesses: What the 2026 Budget means for investment and growth

As 2026 progresses, many Ontario businesses remain focused on investment, expansion, and modernization. The provincial budget provides important direction on how those plans can be supported, and companies working with partners like Ayming can more easily identify where opportunities align with their growth objectives.

While the headline figures reflect a projected $13.8 billion deficit and rising net debt, the more relevant takeaway is where the province is maintaining its commitment to invest. Ontario continues to prioritize advanced manufacturing, critical technologies, life sciences, automotive, mining, and trade resilience, reinforcing its objective to strengthen competitiveness and support long-term economic growth.

An important shift within this budget is the expansion of several business tax credits, particularly those tied to capital investment, manufacturing, and innovation. This reinforces Ontario’s approach to supporting growth not only through government funding programs, but also through the tax system, creating more accessible and scalable support for companies investing in the province.

This creates a more structured and predictable environment for businesses pursuing modernization, scale-up, commercialization, supply chain expansion, or technology adoption. Projects aligned with these priorities are increasingly positioned to benefit from a combination of funding programs and enhanced tax incentives.

Understanding how these priorities connect to your investment plans will be critical to capturing available support and strengthening the overall business case for growth.

The investment signals businesses should watch

A central theme in the budget is Ontario’s continued focus on protecting and strengthening its industrial base in the face of trade disruption and geopolitical uncertainty. For businesses, this translates into sustained support for projects that reinforce domestic capacity and long-term competitiveness.

One of the clearest examples is the Invest Ontario Fund, which was increased by $600 million in the 2025 Budget, bringing the total to $1.3 billion. The province is using this fund to attract strategic investments and secure jobs across priority sectors, particularly where projects contribute to long-term economic resilience.

Ontario is also reinforcing trade and supply chain resilience. In November 2025, an additional $100 million was allocated to the Ontario Together Trade Fund to support near-term investments, expand interprovincial sales, strengthen trade capabilities, and reshore critical supply chains.

At the same time, the province continues to strengthen tax-based incentives for capital investment. The Ontario Made Manufacturing Investment Tax Credit remains a key policy tool, with enhancements that increase its value and broaden eligibility for a wider range of businesses.

Taken together, these measures highlight a clear direction. Projects focused on domestic production, market diversification, and supply chain security are closely aligned with Ontario’s economic priorities and are well positioned to benefit from available support.

Tax credits are playing a bigger role in investment decisions

A key shift in the 2025 Budget update was the expanded role of tax credits as a driver of investment.

The Ontario Made Manufacturing Investment Tax Credit (OMMITC) had been enhanced to:

• Increase the credit rate to 15% (from 10%) for qualifying investments
• Extend access beyond CCPCs through a 15% non-refundable version for larger corporations
• Provide more flexibility around when expenditures qualify (including timing of “available for use”)

For manufacturers, this materially improves after-tax project economics particularly for machinery, equipment and production line investments.

At the same time, Ontario is aligning more closely with federal innovation policy by expanding access to refundable R&D-style support:

• Higher taxable capital thresholds before phase-out
• Increased refundable expenditure limits
• Broader eligibility for scaling companies, including some public corporations

For growing firms, this reduces the traditional “cliff” where support declines as companies scale, making Ontario more competitive for mid-market and late-stage innovators.

The takeaway is clear, tax credits are becoming a more predictable and scalable funding lever, particularly when combined with grants and government funding programs.

Critical technologies remain a priority

Ontario continues to signal that advanced technology is central to its growth agenda. The budget renews the Critical Technology Initiatives (CTI) program with an additional $107 million over three years starting in 2026–27. The program is designed to accelerate the development, commercialization, and adoption of technologies such as AI, quantum, cybersecurity, robotics, advanced connectivity, and semiconductors.

This direction is also reinforced through the tax system. Enhanced R&D incentives and broader eligibility for innovation-related tax credits allow companies investing in these areas to layer multiple forms of support, including:

• Provincial investment tax credits
• Federal SR&ED tax credit support
• Provincial government funding programs such as CTI

For businesses, the message is clear. Ontario continues to support the ecosystem behind commercialization and industrial adoption, while making it easier to combine multiple programs into a more effective funding strategy.

Life sciences and scale-up still matter

The budget reinforces Ontario’s position in the life sciences sector. An additional $24 million over three years has been allocated to renew the Life Sciences Scale-Up Fund, supporting Ontario SMEs in the human health sciences sector as they commercialize market-ready products, scale operations, and strengthen competitiveness.

Enhancements to innovation-related tax credits also play an important role. These changes improve cash flow for scaling companies, particularly those transitioning from R&D into commercialization and early-stage growth.

This reflects a continued provincial focus on keeping commercialization and growth anchored in Ontario, especially in sectors where intellectual property, specialized manufacturing, and procurement readiness are critical to long-term success.

Forest sector opportunities should not be overlooked

Through the Forest Sector Investment and Innovation Program, the province indicates that over $72 million will be invested, leveraging approximately $425 million in new project activity to support the adoption of innovative technologies, improve productivity, and bring more Ontario wood products to market.

For businesses involved in wood transformation, engineered wood, automation, process equipment, industrial systems, or value-added manufacturing, this represents a meaningful signal. The sector continues to be positioned as an important contributor to Ontario’s industrial growth.

These projects may also benefit from capital-focused tax credits such as the OMMITC, particularly where investments involve processing equipment, automation, or the modernization of production assets.

The forest sector is being treated as part of Ontario’s broader competitiveness agenda, with opportunities that extend beyond primary production into advanced manufacturing and technology adoption.

Automotive, manufacturing and critical minerals remain strategic

Ontario continues to support the automotive value chain with $85 million allocated to the Ontario Automotive Modernization Program and the Ontario Vehicle Innovation Network. These programs help suppliers and SMEs modernize equipment, adopt new technologies, and strengthen regional innovation capacity.

The province is also advancing its critical minerals strategy. The Ontario Junior Exploration Program will receive an additional $30 million over three years, building on the $10 million announced in July 2025. The Critical Minerals Innovation Fund remains active, supporting exploration, development, processing, and commercialization across the value chain.

Tax credits continue to complement these initiatives. Investments may qualify for enhanced capital tax credits in areas such as:

• Processing equipment
• Manufacturing capacity
• Technology integration

These incentives can improve project ROI and accelerate investment timelines. For engineering firms, equipment manufacturers, processing technology providers, and industrial service companies, this demonstrates that Ontario is not only supporting extraction but also strengthening the broader industrial ecosystem that surrounds it.

Why this matters for your business

Even in a tighter fiscal environment, Ontario is directing significant resources toward competitiveness, industrial modernization, and investment attraction. Tax credits now play a larger and more strategic role, creating opportunities for businesses to:

• Reduce the cost of growth projects through enhanced tax credits and stacked funding
• Strengthen funding cases for modernization, commercialization, and scale-up initiatives
• Align capital projects with domestic production, supply-chain resilience, and critical technology adoption
• Combine tax credits, grants, and loans into a more effective funding strategy

Ontario’s 2026 Budget provides a clear roadmap for investment and growth. At Ayming, we help businesses translate these priorities into actionable funding strategies, identify the most relevant programs, and strengthen the business case needed to secure support.