2025-2026 Québec Budget Summary

The Quebec government's budget, tabled on March 25, 2025, introduces several changes to the research and development (R&D) and e-business development (R&D) and e-business development (TCEB) tax credits.

1. R&D tax credit: A new R&D, innovation and pre-commercialization tax credit (CRIC) will be introduced for taxation years beginning after March 25, 2025. This reform entails the elimination of eight existing tax measures.
2. TCEB : Adjustments have been made, notably concerning the qualification of eligible activities, including considerations related to artificial intelligence. The changes will apply to taxation years beginning after December 31, 2025. The credit will then be referred to as the CRIC.

CRIC

Refundable credit rate :

• 30% on first eligible expenses up to $1 million, above the exclusion threshold. 
• 20% on eligible expenses in excess of $1 million.

Exclusion threshold : 

This threshold will now be defined as the higher of the following two amounts: 

• 50 000 $.
• The total of the “employee threshold”, which corresponds to the basic amount applicable to personal income tax, adjusted according to the time spent on eligible activities by each eligible employee.

Eligible R&D and/or pre-marketing expenses : 

• Salaries. 
• 50% of subcontracting costs. 
• Capital expenditure on new assets acquired and used 90% or more in R&D activities.

TCEB

The legislation will be revised so that an activity will be considered eligible if it is oriented towards e-business that significantly integrates artificial intelligence artificial intelligence (AI) functionalities. 

More specifically, an activity will be deemed eligible for an employee if it is primarily related to e-business in connection with a project, mandate or product that significantly integrates AI functionalities.

Other modifications

• Activities linked to the maintenance or evolution of information systems or technological infrastructure will no longer be considered eligible. eligible.
• Addition of data processing and hosting activities for the application of the and services criteria.
• Reduction of the credit in certain cases of inter-company outsourcing.

Consequential abolition of certain tax measures

In parallel with the introduction of the CRIC, several tax credits will be abolished for any taxation year beginning after March 25, 2025, including :

• Scientific research and experimental development tax credit.
• Tax credit for university research and research carried out by a public research center or research consortium.
• Tax credit for pre-competitive research in private partnership.