Ontario's 2025 Fall Economic Statement, released November 6, 2025, told businesses directly where to look for the province's next move on corporate tax: "an update on the Tax Action Plan will be provided in the 2026 Ontario Budget." That budget has not been tabled yet as of this writing, but it is expected within weeks, and it is the document that will confirm whatever comes next for Ontario's small business tax rate and related measures. For Toronto-area CCPCs, late March is also when most calendar-year corporations are making their first quarterly instalment payment of the year — which puts budget uncertainty and instalment planning on the same calendar page. Here is what is already confirmed, what is still pending a Budget announcement, and how to handle a Q1 instalment estimate sensibly while you wait.
What the Fall Economic Statement actually promised
Ontario's annual budget cycle runs on two documents: the spring Budget and the fall update. The November 6, 2025 Fall Economic Statement was explicit that it was not the vehicle for broader tax policy changes — it deferred that to the 2026 Budget.
That phrasing matters for a Toronto owner-manager trying to plan ahead: it signals that further changes to the small business tax environment are coming, but it does not commit to a specific rate, threshold, or effective date. Anything reported elsewhere as a confirmed 2026 Budget number should be checked against the Budget document itself once it is tabled, not assumed from pre-Budget commentary.
What is already locked in, independent of the Budget
Two pieces of the small business tax picture are already in force and do not depend on what the 2026 Budget contains:
| Measure | Status | Effective |
|---|---|---|
| Ontario small business limit | Already increased | $500,000 → $600,000, effective January 1, 2026 |
| Federal small business limit | Unchanged | Remains $500,000 |
| Ontario general CIT rate | Unchanged | 11.5% (26.5% combined with the federal rate) |
| Ontario HST | Unchanged | 13%, recoverable by HST registrants |
The Ontario small business limit increase to $600,000 was already legislated ahead of the 2026 calendar year, so a Toronto CCPC with active business income between the old $500,000 ceiling and the new $600,000 one is already taxed on that additional band at Ontario's small business rate for any income earned since January 1, 2026 — this is not something the 2026 Budget needs to confirm again. Because the federal limit stays at $500,000, the extra $100,000 band gets Ontario's reduced rate but still faces the federal general rate on that portion, which is a detail worth flagging to whoever prepares your T2 if your income sits in that range. See our Ontario corporate tax guide and small business deduction limit guide for how the federal and provincial limits interact.
Why this matters for your Q1 instalment
The Canada Revenue Agency requires most corporations expecting more than $3,000 in total tax payable to pay instalments through the year rather than a single amount at filing time — monthly for most corporations, quarterly for eligible small CCPCs with a clean compliance history.
Source: Canada Revenue Agency — When your corporation has to pay instalments.
For a calendar-year Toronto CCPC on quarterly instalments, the March 31 payment is the first of 2026. Whatever the 2026 Budget confirms about the small business rate itself will not change your March 31 obligation retroactively, but it can change what the rest of the year's instalments should be based on — which is exactly why it is worth building the estimate on a method that is easy to revise, rather than one that locks in an assumption you may need to unwind in a few weeks.
CRA gives corporations three ways to calculate the instalment base:
| Method | How it's calculated | Best fit for |
|---|---|---|
| No-calculation option | CRA uses the prior year's assessed tax (or the two years before, if the prior year isn't assessed yet) | Corporations with stable, predictable income |
| Prior-year option | You estimate based on the prior year's tax, adjusted for known changes | Corporations that know something changed but can still anchor to last year's actual numbers |
| Current-year option | You estimate the current year's tax directly | Corporations with a reliable current-year forecast, including a known rate or threshold change |
Source: Canada Revenue Agency — Calculating instalment payments.
A Toronto CCPC already earning income in the new $500,000–$600,000 Ontario small business band, using the no-calculation option, is basing its instalments on a 2025 year that did not yet reflect the higher $600,000 limit — which likely understates this year's small business income and, with it, this year's instalment base. That gap is worth correcting now with the current-year option, independent of whatever the Budget confirms later. Run the numbers through our corporate tax calculator before finalizing the Q1 payment.
What to do about the parts that are still pending
For anything the 2026 Budget has not yet confirmed — most notably any further move on the small business rate itself — the sensible approach is not to bake a guess into your Q1 instalment base. CRA lets corporations switch calculation methods between instalment periods, so there is no cost to waiting for the actual Budget numbers before adjusting a mid-year instalment, and a real risk to acting on a rate or date that turns out to differ from what is tabled.
What Toronto-area CCPCs should do now
- Confirm your Q1 instalment already reflects the $600,000 Ontario small business limit if your active business income falls in the $500,000–$600,000 range — this is confirmed and in force regardless of what the Budget adds.
- Avoid building an assumed rate change into your instalment base until the 2026 Budget is actually tabled and the measure is confirmed in the document itself, not in pre-Budget commentary.
- Check which instalment calculation method is being used — no-calculation, prior-year, or current-year — and whether it still reflects your 2026 income trajectory given the higher limit.
- Revisit the instalment base again once the Budget is released, using the current-year option if a confirmed rate or threshold change materially affects your remaining 2026 payments.
- Keep your bookkeeping or payroll provider in the loop on both the confirmed limit change and anything the Budget adds — a bookkeeping and payroll provider working from stale defaults is a common source of instalment drift.
Key takeaways
- The 2025 Fall Economic Statement (November 6, 2025) explicitly deferred broader small business tax changes to the 2026 Ontario Budget, which has not been tabled as of this writing.
- The Ontario small business limit increase to $600,000 is already in force as of January 1, 2026, independent of the upcoming Budget — the federal limit stays at $500,000.
- A calendar-year Toronto CCPC on quarterly instalments makes its first 2026 payment on March 31 — a natural checkpoint to confirm the instalment base already reflects the higher limit.
- Do not build an assumed rate change into your instalment estimate before the Budget confirms it — CRA allows switching calculation methods mid-year at no cost.
- Revisit the instalment base again once the Budget is released, using the current-year option if a confirmed measure materially changes your remaining 2026 payments.
If your Q1 instalment base needs checking against the confirmed $600,000 limit, or you want your 2026 instalments reviewed once the Ontario Budget is actually tabled, RN Canada works with Toronto-area CCPCs remotely on corporate tax planning from our Edmonton and Vancouver offices.