Takeaways from the 2025 Ontario Budget
MAy 16, 2025
The most important tax changes from the Ontario Budget 2025 were enhancements to the Ontario Made Manufacturing Investment Tax Credit (OMMITC). Other notable items include a substantial reduction in alcohol taxes, fertility treatment tax credits, and gasoline and fuel tax rate cuts being made permanent.
Refundable Manufacturing Tax Credit
This is an excellent program and has been helpful to a number of RMRs manufacturing clients. The enhancements are significant.
With a goal of stimulating manufacturing sector growth, investments in buildings used for manufacturing or processing in Ontario and machinery and equipment used in the manufacturing or processing of goods in Ontario are now eligible for up to $1 million more in refundable tax credits:
Increased Credit Rate: The refundable tax credit rate for CCPCs will rise from 10% to 15%, increasing the maximum annual credit from $2 million to $3 million.
Effective Period: These enhancements apply to eligible investments made on or after May 15, 2025, and before January 1, 2030.
In addition to the 5% increase in funding the government also proposed amendments introducing recapture rules. Corporations will now be required to repay the credit if the qualifying property is sold, converted to non-manufacturing or processing use, or is removed from Ontario within five years of the property becoming available for use.
Other changes
Effective August 1, 2025, Ontario will implement significant reductions in alcohol taxes and mark-up rates to support local producers. The spirits tax reduction at distillery retail stores will be halved, from 61.5% to 30.75%. This reduced rate applies to spirits produced by Ontario manufacturers and sold directly to consumers at on-site distillery retail stores. Also, the LCBO mark-up rates for several other beverages have been reduced as well as tax reductions for Ontario microbreweries.
The government is proposing a new refundable personal income tax credit for families in Ontario with eligible medical expenses related to fertility treatment, starting with the 2025 tax year. The credit would be equivalent to 25 per cent on eligible fertility treatment expenses (including expenses related to surrogacy) up to $20,000, providing for an annual maximum tax credit of $5,000. This credit can be claimed in addition to the currently available non-refundable medical expense tax credit on the same eligible expenses.
Finally, the previous temporary gas tax rate cut of 5.7 cents per liter and the fuel (diesel) tax rate cut of 5.3 cents per liter is being made permanent, keeping the provincial rates of tax on gas and fuel to 9 cents per liter.
Please reach out if you have any questions.