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The Peace Tower on Parliament Hill last month.Justin Tang/The Canadian Press
The federal government has plenty of additional cash rolling in. Over the next five fiscal years, including the current 2026-27 period, government revenues will be on average $23.9-billion higher annually than projected in the spring.
Ottawa has loads of extra headroom to increase spending – which it is, according to proposals in Thursday’s budget.
Over the five-year horizon, net new spending will amount to $151.5-billion, spread across a variety of initiatives, from boosting housing supply to bulking up cultural sovereignty. With that in mind, here are 10 key takeaways from the budget.
Deficit
A big question ahead of the budget was how the Carney government would balance its ambitious investment agenda against fiscal constraints. The answer is a budget balance that looks better than it did in the spring, but declines slower than many fiscal hawks would like.
The deficit for the 2026-27 fiscal year amounts to $62.3-billion, roughly in line with private-sector expectations. The government said the deficit will shrink slightly in the coming years, reaching $52.9-billion by 2030-31.
The government said this would allow it to meet its fiscal anchors of balancing day-to-day operating spending with revenue a year ahead of its earlier 2027-28 target, while continuing to reduce the deficit as a share of the economy in the coming years.
However, last month Canada’s budget watchdog, Parliamentary Budget Officer Annette Ryan, said she was skeptical Ottawa can meet that second target, and forecast annual deficits that are cumulatively $44.7-billion larger than Ottawa’s over the next five years.
Debt
To meet its budget shortfalls, the Carney government will continue to pile on debt in the coming years, though it insists it is doing so responsibly.
The federal debt is slated to hit $1.36-trillion in the 2026-27 fiscal year, which amounts to 39.9 per cent of gross domestic product, down slightly from 40.2 per cent last fiscal year. By 2030-31, the debt load is projected to grow by $227-billion, though as a share of the economy it is expected to remain at around 40.1 per cent.
There’s still much that could go wrong with that outlook, depending on Canada’s growth trajectory and borrowing costs, which have been on the rise this year. Yet under what the budget describes as the “global supply disruptions scenario” – in other words, more war, more political tensions – the government still projects debt-to-GDP will be only a notch higher by 2030-2031, at 40.5 per cent.
Spending
With a sunnier outlook for the economy baked into the budget’s fiscal assumptions, the federal government has in turn boosted new spending by $150-billion since the spring economic update. Several buckets of new money stand out.
Long-term funding for infrastructure in Indigenous communities is a headline here. Thursday’s budget announced $18.5-billion over 10 years in new funding for on-reserve infrastructure: everything from roads and bridges to health care facilities, plus further funding for water and wastewater infrastructure. It also earmarks $11-billion over 10 years to maintain nearly 120,000 existing housing units and build 6,900 new homes.
Housing, more broadly, is a focus of Thursday’s budget as well. Toward a goal of ending homelessness in the next 10 years, the government is earmarking $11.2-billion over the next four years, and $17.8-billion in years after that. This funding will support housing that integrates health care and mental health supports, and the construction of new transitional housing. It also bolsters rental assistance for vulnerable people and mental health support for homeless veterans.
The federal government has also announced a host of new measures under its Powering Canada Strong action plan, which amounts to $8.7-billion over four years starting in fiscal 2027-28. That includes extending the clean technology and clean energy investment tax credits to 2040, while expanding eligibility to high-voltage intra-provincial transmission lines. The budget said the government would also provide $4-billion over 10 years to support electricity infrastructure expansion and renewable energy projects.
Housing
In a budget document leaning heavily on themes of destiny and self-determination, page one carries a declaration about Ottawa’s view of how housing fits into those goals: “Sovereignty begins chez vous, in your home.”
On the dollar side of that equation, Ottawa said it would add $13-billion in new capital over ten years on a cash basis to Build Canada Homes, an agency it launched in September 2025 to accelerate home construction. That would bring its total capital to $45-billion, and the government said the new investment would set the agency “on a path” to build 200,000 new homes across Canada over the next decade.
Ottawa said it would also spend $1.5-billion over four years, starting in 2027-2028, and $387.4-million in subsequent years to ready federal land for new housing projects.
At the same time, the government said it would introduce legislation to extend a ban on foreign residential property purchases to January 1, 2029. The restrictions had been set to expire this coming January.
Business investment
Earlier this week, Finance Minister François-Philippe Champagne had touted the budget as being “about entrepreneurs.” Whether business innovators will feel the same way is unclear.
They’ll certainly welcome some measures. The budget announced a new exemption from capital gains of up to $15-million from investments in eligible Canadian companies that have assets of $100-million or less at the time of investment and are Canadian-controlled private corporations.
At the same time, the budget will enhance the small-business rollover, which allows investors in successful companies to defer taxes on capital gains when the proceeds are reinvested in another small or medium-sized Canadian business.
The federal government said it would also further expand the Scientific Research and Experimental Development program, a tax incentive that encourages businesses to conduct R&D within Canada. For instance, the expansion would cover spending on tests and studies needed to meet regulatory requirements as well as costs related to intellectual property protection, measures the budget said would provide $930-million in support over five years, and $235-million a year afterward.
All that said, those hoping for broad-based corporate tax reductions will be disappointed.
Personal finance
While the budget doesn’t include any broad-based personal tax cuts, there are changes that will benefit some families.
Against a backdrop of rising fuel and food costs, the Canada Groceries and Essentials Benefit, which replaced the GST/HST tax credit last July, is set to get a boost with a one-time payment in early 2027 to more than 12 million low- and medium-income households. That will be equivalent to a 50-per-cent increase and will provide up to $2,570 for a family of four within one year.
The budget also addresses a long-standing frustration among retirees who have saved for retirement in registered retirement savings plans. Currently, RRSP holders who turn 71 are required to convert their investments into a registered retirement income fund, or RRIF. The government intends to do away with RRIFs and introduce an “RRSP-for-life.” The new vehicle will still come with the minimum withdrawal requirements that exist now, but will do away with paperwork.
Ottawa said it will allow surviving spouses or partners to become successor holders of an RRSP, and make it easier to transfer savings tax free to survivors when an account holder dies.
Meanwhile, the Canadian Deposit Insurance Corporation will finally ramp up the amount of deposits it insures at banks and in guaranteed investment certificates to $250,000. The insurance limit has been set at $100,000 since 2005 despite years of inflation.
And for chronic late filers, there is some breathing room: the new tax-filing deadline is May 15.
Government efficiency
The budget continues a theme from last year with a number of announcements streamlining federal institutions.
Chief among these is a plan to combine Export Development Canada and the Business Development Bank of Canada, citing cost savings and the fact that both Crown corporations have similar goals.
But there are few details on how much the merging of the agencies will cost or what annual savings are expected.
The budget largely maintains progress on the government’s stated goal of bringing public-service employment in line with Canadian population growth, after employment peaked in 2023-24. Federal public service employment has fallen by 10 per cent since an early retirement incentive program was introduced in the 2025 budget.
The budget also intends to roll the Indigenous Loan Guarantee program, which gives Indigenous groups financing to invest in major infrastructure projects in Canada, under the Canadian Investment Bank umbrella.
Immigration
Whereas immigration has been a hot issue for previous governments, the subject is largely absent from this budget.
The government’s stated priority remains to use immigration to address critical labour shortages and to use temporary foreign workers to support rural and remote growth in particular. It is holding immigration targets stable through 2027-29.
The budget proposes about $150-million over five years to implement reforms to the Temporary Foreign Worker program. These include better aligning the program with regional labour market needs, improving processing time and strengthening employer compliance.
Also announced is a push to transition up to 200,000 temporary residents to permanent resident status by the end of 2027. That represents a sizable increase over last year’s efforts, which converted 160,000 temporary residents.
Defence
Last month, the PBO criticized the government for providing few details of how it would reach the new defence spending target of 5 per cent of GDP by 2035, set in June 2025.
Thursday’s budget provides only small answers on some of those concerns.
The Defence Drone Initiative, a drone marketplace launched in July and built to sell Canadian drones, will receive $2.3-billion over five years, starting in 2027-28, to accelerate its efforts.
Currently, Canada is the only country in the G7 without the ability to launch its own rockets, but this budget aims to address that.
Ottawa has earmarked up to $2.7-billion in other defence funding to go toward multiple priority measures, which include jumpstarting Canada’s medium-lift rocket launch capabilities, building off earlier efforts to expand small-lift launch capabilities.
In the wake of the tragedy at CFB Wainwright, the government is also allocating a surprise $25-million over two years to boost support for members of the Canadian Armed Forces and their families.
Other tidbits
The budget includes a smattering of other pockets of funding.
The government will renew the Canada Strong Pass for another year, providing free or discounted access to national parks, museums, galleries and rail travel. It cited a 13-per-cent increase in visits to Parks Canada sites, and a 15-per-cent increase at national museums.
It’s early, but the government has announced its intentions to consult on a Canada Creative Credit, which will offer a tax break for creative output. More details are expected in the spring economic update in 2027.
Electric-vehicle infrastructure is getting a shot in the arm, with new funding of $587-million over five years to install more than 55,000 more charging stations on top of the approximately 50,000 stations that already exist across Canada.
And if you’re sending mail any time soon, you may want to stock up on stamps: Thursday’s budget announced the price of a standard stamp will jump to $2 in 2027 (from the current $1.44), then increase continually by 7 per cent a year, bringing it in line with OECD peers.
Coming right on the heels of wildfire season, the government has earmarked up to $2.5-billion in financing to increase water bomber production in Alberta.
And for book lovers, the budget includes $32.2-million over four years, plus $9.5-million annually after that, to establish a free national digital collection of books. The collection will launch with at least 200 titles and expand in future years.