Quebec Budget Targets Electric Car Owners and Alters Tax Rules
MONTREAL — Quebecers can expect some financial adjustments following the recent budget announcement by Finance Minister Eric Girard. While the government is avoiding broad tax hikes, several changes will impact residents, particularly owners of electric and hybrid vehicles.
Stéphane Leblanc, a tax partner at EY Canada, noted most of the budget’s alterations are relatively minor. “For the average taxpayer, the budget won’t have a lot of impact… It’s mostly status quo,” he stated. He also mentioned that Girard had limited options, facing a large deficit while navigating economic uncertainties.
Increased Insurance Premiums
The budget’s most widespread change involves an increase in taxes on car and home insurance premiums. Starting January 1, 2027, the tax rate will rise to 9.975 percent from the current 9 percent. This change will increase expenses for those paying premiums. Over four years, the government anticipates nearly $1 billion in additional revenue from this tax.
Electric and Hybrid Vehicle Fees
Owners of electric and plug-in hybrid cars will face new fees starting January 1, 2027. Electric vehicle owners will pay an annual tax of $125, while plug-in hybrid owners will pay $62.50. This is driven by the perceived shortfall in road infrastructure funding from decreased gas tax revenue. The new tax is expected to generate $380 million over four years.
Owners of electric and hybrid vehicles can expect increased fees.
Additionally, as of April 1, 2027, electric and hybrid vehicle owners will no longer be exempt from fees on Quebec ferries and toll bridges, such as those on Highways 25 and 30 in the Montreal area. This measure aims to generate $76 million over three years for road networks, public transit, and ferry services.
Tax Relief for Luxury Vehicle Owners
Not all changes will increase financial burdens. Quebec owners of luxury passenger vehicles will benefit from an adjustment to the additional registration fee. The threshold for the so-called luxury vehicle tax will be raised to $62,500, up from the current $40,000 for vehicles seven years old or less. This change is intended to account for rising vehicle prices and will cost the government $98 million over four years.
Alterations to Medical Expense Tax Credits
The province is revising rules concerning the non-refundable tax credit for medical expenses. Starting January 1, 2026, only expenses related to health services provided by practitioners registered with a Quebec professional order will be eligible for the credit. This means certain alternative medicine services, including those from homeopaths, osteopaths, and naturopaths, will be excluded.
Childcare Expense Changes
The government is adjusting the refundable tax credit for childcare expenses. Starting in 2026, the credit will apply only to children under 14, as opposed to the current age limit of 16. This change, with an expected savings of $42 million over four years, excludes children with severe or prolonged impairments.
Political Donation Tax Credit Eliminated
Quebec will eliminate the tax credit for contributions to municipal political parties starting January 1, 2026. This move is expected to save the government $3.5 million over four years.
Foreign Property Declaration
New documentation will be required for owners of foreign property valued at over $100,000. Taxpayers already declare these assets on their federal income taxes but will soon need to complete a separate form for provincial taxes as well. The implementation date for this has not yet been announced.
