Ontario Budget 2026 Manufacturing Outlook

As Ontario approaches its 2026 budget, the direction of travel is becoming clearer. Competitiveness, capital investment, and industrial resilience remain firmly on the agenda.

From our perspective advising manufacturers across Canada, this upcoming budget is less about sweeping change and more about reinforcing momentum. Within that stability, there are several key developments businesses should be watching closely.

Continued support for the Ontario Made Manufacturing Investment Tax Credit

At the centre of Ontario’s manufacturing strategy is the Ontario Made Manufacturing Investment Tax Credit (OMMITC), and all signs point to continued support.

Originally introduced in 2023 and enhanced in 2025, the credit now offers

• 15 percent refundable support for CCPCs
• Up to 3 million dollars annually based on a 20 million dollar investment cap

The province has also expanded access by introducing a 15 percent non refundable version for non CCPCs, signalling a clear intent to attract larger and foreign owned manufacturers.

Ontario is not just maintaining the program. It is actively positioning it as a cornerstone incentive to

• Anchor supply chains locally
• Encourage automation and modernization
• Compete with US and global jurisdictions for capital investment

While the credit is currently legislated to run through 2029, with a proposed expiration in 2030, the government has committed to regular reviews to assess effectiveness and competitiveness.

Our view is that continued political and economic support for the OMMITC is highly likely, particularly given ongoing trade pressures and the push to strengthen domestic manufacturing.

Schedule 572 the administrative bottleneck

Despite strong policy intent, execution remains a challenge. To claim the OMMITC, corporations must file Schedule 572 with their T2 return. However, as many businesses have experienced, the form has not yet fully caught up with recent legislative enhancements, particularly the 15 percent increase and expanded eligibility.

This creates a familiar disconnect where policy is moving forward but administration is lagging behind.

With the 2026 filing season approaching, there is growing expectation across the market that an updated Schedule 572 will be released before May to align with filing deadlines.

Our view is that this is more than a compliance issue. It is a cash flow issue. Delays in form availability can directly impact a company’s ability to claim and realize refundable credits on time.

The missing piece, will Ontario introduce an IP Box?

While Ontario has made meaningful progress on capital investment incentives, one gap remains the commercialization of intellectual property. Globally, jurisdictions are increasingly adopting IP box regimes, which offer preferential tax rates on income derived from patents and innovation to retain high value activities domestically.

To date, Ontario has not introduced such a regime. However, there is growing expectation that Ontario may begin exploring an IP box framework, or at minimum signal intent in the upcoming budget, given:

• Increased focus on innovation and advanced manufacturing
• Federal support for clean technology and IP development
• Ongoing competitiveness pressures with the US and Europe

Our view is that if introduced, even in a preliminary form, an IP box would represent a natural evolution of Ontario’s incentive ecosystem, complementing the OMMITC by supporting not just where products are made, but also where value is created and retained.

Strategic takeaways for manufacturers and businesses

For manufacturers and capital intensive businesses, the 2026 Ontario budget is shaping up to be one of refinement rather than reinvention.

Key actions to consider now

• Advance capital planning to fully leverage the 15 percent OMMITC window
• Prepare documentation early, particularly in anticipation of Schedule 572 updates
• Monitor policy signals around innovation incentives and potential IP frameworks
• Model incentive stacking opportunities, especially alongside federal programs

Final thoughts on the Ontario Budget 2026

Ontario’s message is clear. Investment in manufacturing is a priority and will remain one.

The OMMITC continues to be a powerful lever, but the organizations that extract the most value will be those that take a proactive and structured approach to both planning and compliance.

At Ayming Canada, we help manufacturers navigate these incentives, maximize refundable tax credits, and position ahead of policy changes to ensure they capture every available opportunity.

As we head into the 2026 Ontario budget, the opportunity is not just to react to policy, but to plan strategically and act early.

Ayming Expert, Ryan Matwiy
Manager, Canadian Tax Credits