Prime Minister Mark Carney delivered a “change” budget highlighted by tax breaks for corporations and investors, incentives for nation-building projects and support for economic growth in promising areas like AI, defence and export industries.

Designed to vault Canada beyond the crippling U.S. trade war, the wide-reaching package contained extensive new spending that will see this year’s federal budget deficit, last projected at $42 billion, rise to $78.3 billion. In 2026-27, the deficit is forecast to decline slightly to $65.4 billion.

With dozens of pro-growth measures, some of which have been the subject of recent announcements, the budget is meant to actualize Carney’s vision of building a more resilient, productive future economy.

Among the announced measures:

Economic growth incentives

The government is committed to advancing economic growth and long-term industrial capacity in the face of damaging U.S. tariffs. It hopes to generate $500 billion in private sector investment over five years through a series programs and tax incentives:

A Productivity Super Deduction to enhance tax write-offs for all new capital investment.
Immediate expensing of costs for purchases of manufacturing or processing buildings.
$440 million a year more in funding to increase research and development under SR&ED.
$925.6 million over five years to support public AI infrastructure.
$1 billion over three years to leverage private venture capital through the Venture and Growth Capital Catalyst Initiative.
$1.7 billion to recruit a thousand highly qualified international researchers.

Promoting major projects

$115.2 billion over five years on bridges, public transit and other infrastructure.
$55.2 million over four years to enhance the economic viability of local and regional airports.
$51 billion over 10 years under the Build Communities Strong Fund for cities to support infrastructure projects such as hospitals, colleges and community centres (with provincial cost-matching).
To modernize the electricity grid to support the needs of energy-intensive economic sectors, the government will soon deliver a Clean Electricity investment tax credit.
More than $2.4 billion to support critical mining projects.
Committing to a “dig once” policy to encourage coordinated installation of fibre optics lines as part of the development of major projects

Business strategy

$25 billion for businesses and workers to protect and support them from the impact of tariffs.
The central initiative supported by the above funding is the $5 billion Strategic Response Fund to help sectors hit by tariffs to adapt and grow.
Also included is more than $600 million to support the agricultural sector and seafood producers, as well the creation of a Biofuels Production Incentive.
$1.2 billion is devoted to helping the forestry sector maintain operations and diversify market opportunities.
$98.2 million to bring in a federal Buy Canadian Policy.
$79.9 million over five years to support a Small and Medium Business Procurement Policy.
$5 billion for the Trade Diversification Corridors Fund for infrastructure to support exports.
The budget spelled out the government’s multi-billion Trade Diversification Strategy, including expanding Export Development Canada’s support for exporters, establishing a Strategic Exports Office at Global Affairs and specialized backing for technology companies selling abroad.
A defence industrial strategy was announced to help domestic manufacturers capitalize on $81.8 billion over five years in defence spending. A new $30-million Defence Investment Agency was announced to streamline defence procurement.
The government will continue to explore ways to encourage capital markets and banks to support the deployment of capital seen as crucial to growing the economy.
Moving to make it easier for credit unions to join the federal banking framework.

Housing

$13 billion as an initial investment in Build Canada Homes.
Eliminating the GST on first-time homebuyers on new homes up to $1million.
To support construction of multi-unit homes, the government will increase the Canada Mortgage Bond annual issuance limit to $80 billion.

Culture

$48 million over three years for the Canada Music Fund.
$127.5 million over three years for the Canada Media Fund
$6 million for the Canada Council for the Arts
Amending the Copyright Act to create an Artist’s Resale Right in Canada to ensure visual artists benefit from future sales of their work.
$38.4 million to help small and community news outlets.

Spending cuts

The governments’ Comprehensive Expenditure Review is expected to lead the way in spending reductions predicted to total $60 billion over five years.
This includes savings of $25.2 billion over four years by reducing discretionary travel and training and limiting use of external consultants.
Saving $200 million by winding down the 2 Billion Trees Program.
Streamlining government operations to save $600 million over four years by using new technologies to reduce inefficiencies.