Federal government plans tax changes to enable $1 trillion boost to economy

Prime Minister Mark Carney speaks during a news conference following the APEC Summit in Gyeongju, South Korea, Saturday, Nov.1, 2025. THE CANADIAN PRESS/Adrian Wyld

Prime Minister Mark Carney’s government announced plans to enable $1 trillion in investments to drive productivity and boost the Canadian economy to enhance partnerships at home through a new industrial strategy.

Finance Minister François-Philippe Champagne introduced Budget 2025: Canada Strong on Tuesday. It includes several tax changes aimed at encouraging investment in manufacturing, clean energy and research and development as the government aims to spend less on operations and invest more in workers, businesses and nation-building infrastructure to grow a domestic economy.

Ottawa plans to attract companies to invest and innovate in Canada through investment tax credits such as the Productivity Super-Deduction, and improvements to the Scientific Research and Experimental Development tax incentive.

• READ: Ottawa promises more oversight on banks, increase access to funds deposited by cheque

The government states tax incentives and planned spending of over five years (about $280 billion cash basis) in support of third parties will enable more than $1 trillion in investments - $315 billion in infrastructure, $210 billion in supports for private research and development, $130 billion in housing, $270 billion in industrial development programs, $60 billion in accelerated depreciation and immediate expensing measures and $95 billion other tax incentives to open the doors for further investments.

“The government is acting decisively by improving regulatory efficiency, increasing competition, boosting tax incentives for new investments, and promoting generational investments in housing and infrastructure,” Budget 2025 reads.

The government states the rules-based international order and trading system has hurt companies, displaced workers and caused major disruption and upheaval for Canadians, prompting them to spearhead a nation-wide initiative, according to a news release accompanying the budget document.

“To drive productivity, boost the capacity of Canada’s economy and to secure a prosperous future for Canadians, Canada needs a sea change to reverse Canada’s weak private sector investment,” Budget 2025 reads. ”The government is acting decisively by improving regulatory efficiency, increasing competition, boosting tax incentives for new investments and promoting generational investments in housing and infrastructure,”

Focus on AI, housing and defence

Ottawa plans to attract investment to unlock AI data centres for the “next generation of infrastructure,” supercharge housing construction and further develop a defence industry.

The government says “generational investments” will create demand for domestic production while supporting growth for strategic sectors and empower Canada to capitalize on its natural advantages.

• READ: Canada promises $6 billion support for businesses to reach new markets

“Investments in the areas of skills and technology will also help build new capabilities and bolster Canada’s productivity capacity. Canada has a significant potential, comparable if not better than other advance economies, in emerging technologies such as AI or Quantum computing,” reads Budget 2025.

Further funding for Major Projects Office

The government plans to build on it’s Major Projects Office by providing $213.8 million over five years, starting in the 2025 to 2026 fiscal year, according to the Budget.

Ottawa previously announced the first five projects referred to the MPO that it said collectively represent $60 billion in total capital investment. In the budget, it said further national building projects, taken together, are expected to trigger at least $150 billion in total capital investment.

The MPO was developed to fast-track nation-building projects by streamlining regulatory assessment and approvals and helping to structure financing, in close partnership with provinces, territories, Indigenous Peoples, and private investors.

Previously announced projects include LNG Canada Phase 2 in Kitimat, B.C., the Darlington New Nuclear Project in Bowmanville, Ont., and Contrecœur Terminal Container Project in Contrecoeur, Que.