Ontario's 2026 Budget cuts the provincial small business corporate income tax rate from 3.2% to 2.2%, effective July 1, 2026. The reduced rate applies to Canadian-controlled private corporations on the first $500,000 of active business income and is prorated for taxation years that straddle the July 1 implementation date. It stacks with the federal 9% small business rate.
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Ontario cuts small business corporate tax rate from 3.2% to 2.2%, effective July 1, 2026
Why this matters for founders
Ontario-incorporated founders running a CCPC will pay roughly $5,000 less provincial tax per $500,000 of eligible profit; confirm your corporate year-end straddles July 1 with your accountant so the proration is applied correctly.
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