What to know
- The 2026 federal budget includes $142.1 billion in new spending and tax breaks, with a projected $62.3-billion deficit.
- The government is allocating $29 billion over 10 years to its plan to end homelessness in Canada.
- New housing investments include funding for faster building permits, modern construction methods and more affordable mortgage options.
- Self-employed Canadians could get until May 15 to file their taxes, instead of April 30, starting in 2027.
- The government is proposing an RRSP-for-life system to simplify retirement savings and maintain the same withdrawal requirements.
- Canada is proposing immigration targets of 380,000 permanent resident admissions and 370,000 temporary resident arrivals annually from 2027 to 2029.
Prime Minister Mark Carney’s government unveiled its second federal budget on Thursday, including a total of $142.1 billion in new spending and tax breaks and a focus on affordability.
The 2026 budget expects a $62.3-billion deficit for the fiscal year, which is about $3 billion down from its April projection.
From more housing starts to homelessness reduction efforts to new tax filing rules, here are some of the highlights of the annual budget.
Plan to end homelessness within 10 years
Allocating $29 billion to tackle homelessness, the federal government made an ambitious promise of ending homelessness in Canada within the next decade.
The plan proposes $11.2 billion in investments to tackle homelessness in the next four years, including $3.6 billion for supportive and transitional housing and $1.8 billion for mental health facilities and support. Another $17.8 billion will be invested over 10 years.
The federal government says it will work closely with other levels of government and philanthropy to provide support for those experiencing homelessness and help them access permanent homes, training, jobs, and income support, in addition to building healthcare facilities for extra support.
The plan also includes making a historic investment in transitional and permanent housing which it says is “necessary to pragmatically ending the homelessness crisis.”
“Homelessness is increasingly visible in communities across Canada. It affects people’s mental health, safety, and well-being. With sustained action and governments working together, we can prevent homelessness, help people move into permanent homes, and reduce the number of people who return to homelessness,” the document states.
Building affordable housing
Building on its affordability focus, the government’s budget also promises to build more homes and bring housing costs down.
The government proposes investing $100 million over the next three years to build a partnership with the Federation of Canadian Municipalities to support faster electronic permits, adopting new technologies powered by AI to enable more efficient and faster approval processes.
In addition, it plans to invest $300 million over the next three years and $200 million in future years into Innovation, Science and Economic Development Canada for the Strategic Response Fund, which it says will facilitate the adoption of modern construction methods and lower construction costs.
The government also plans to invest $67.7 million in the next four years and $101.2 million in future years to “modernise housing data and establish common standards for modern methods of construction.”
The government says it will also extend the ban on foreign purchases of residential properties until Jan. 1, 2029, with an exemption for new residential properties.
The budget also proposes taking action to make mortgage payments more affordable, including:
- Establishing regulations for the Bank of Canada to provide more publicly available information about insured mortgage rates.
- Give the Canada Revenue Agency (CRA) authority to make agreements with mortgage lenders and insurers for an income verification service the government says would make mortgage applications more efficient and avoid fraud. The service would be supported by a proposed $13 million investment to the CRA over three years.
- Raising home price limits for optional mortgage insurance from $1 million to $1.5 million and allowing 30-year amortisations for them, which it says could include competition between lenders and lead to more flexibility for buyers.
- Consult with industry experts and stakeholders about other possible reforms to improve transparency around payment penalties for insured mortgages.
New tax filing deadline
The budget is also proposing new tax rules, deadlines, and tax filing system which it says will make the process simpler for Canadians.
Residents might soon have more time to file their taxes, as the government is proposing moving the due date to filing returns or paying taxes owing for self-employed individuals from April 30 to May 15.
The measure would take effect first in 2027 and continue for future years, while the government says it could save Canadians $230 million in interest and penalty payments over five years.
RRSP-for-life
The federal government has also unveiled a plan to simplify the process to manage and transfer retirement savings.
The budget proposes creating a “RRSP-for-life,” which it said would merge the tax rules of RRSPs and RRIFs, eliminating the need to transfer an RRSP into a RRIF at 71, without changing withdrawal requirements.
The new rules would also allow surviving partners to become successors of the RRSP holders after their death.
Flat immigration targets
Maintaining the last budget’s more balanced immigration approach, the 2026 Budget seems to aim towards keeping immigration targets flat, welcoming less temporary residents while offering more pathways for those already living in Canada to access permanent residence.
The government proposes the implementation of a 2027-2029 Immigration Levels Plan, which will target 370,000 new temporary resident arrivals and 380,000 permanent resident admissions in 2027, 2028, and 2029, allocating $56.9 million for the Immigration, Refugees and Citizenship Canada in the next four years and $205.4 million in future years.
The plan also includes admitting 200,000 temporary residents already in Canada to become permanent residents by 2027 through Express Entry or the Provincial Nominee Program. The 2026 Budget proposes investing $302.3 million in the next four years and $90.6 million in future years to implement this plan.
