Federal budget 2026: what Canadian small businesses can plan for now

For 23 years, every Canadian pay stub outside Quebec has been built on the same number. Since 2003, base Canada Pension Plan (CPP) contributions have been set at 9.9% of pensionable earnings, split evenly between employer and employee. On 1 January 2027, that number drops to 9.5%. It’s already law, and it’ll happen whether the federal budget 2026 lands in early November or slides toward December.

That’s worth sitting with, because right now most small business owners are being told to wait for budget day before they plan anything. Meanwhile, there’s a 2027 plan to write and a team who’ll spot the difference on their first January pay stub.

Here’s the useful part about Budget 2026: a surprising amount of what affects your business has already been announced, legislated or set by an independent commission. This guide sorts it into three piles: what’s locked in, what Ottawa has signalled and what small businesses are still asking for. Then it walks through what to do before the budget lands.

When is the federal budget 2026?

As of 20 October 2026, Ottawa hasn’t announced a date. Finance Minister François-Philippe Champagne has confirmed Budget 2026 will be delivered this fall, and most observers expect it in November.

Last year set the pattern. Budget 2025 was the first under Ottawa’s new fall budget cycle. It was tabled on 4 November 2025 and passed the House of Commons on 17 November. Spring now brings a lighter economic update, and this year’s, tabled on 28 April 2026, is where two of the biggest changes below came from.

So the honest answer is likely November, date to come. The more useful question for a small business is what you can act on before then. As it turns out, quite a lot.

Curious how January’s CPP and EI changes would flow through your payroll?

What’s already locked in for January 2027

Two payroll changes take effect on 1 January 2027 regardless of what the budget says: a lower CPP base rate and a slightly higher Employment Insurance (EI) premium.

The CPP base rate drops from 9.9% to 9.5%

The cut was announced in the Spring Economic Update and became law through Bill C-30 in June 2026. Ottawa estimates it saves about $133 a year for an employee earning $70,000, with matching savings for their employer. For a business with 12 employees at that salary, that’s roughly $1,600 a year back on the employer side.

Two details trip people up. The cut applies to base CPP only, while the first additional contribution stays at 1% each. That means the total employee rate on earnings up to the annual ceiling falls from 5.95% to 5.75%. CPP2, the 4% second additional contribution on higher earnings, doesn’t change at all.

The 2027 earnings ceilings haven’t been published yet. The Canada Revenue Agency (CRA) usually announces them in November, so expect another number to land around budget week. Quebec runs its own plan, the Quebec Pension Plan (QPP), so Quebec employers should check Revenu Québec for 2027 rates.

EI premiums tick up to $1.64

The Canada Employment Insurance Commission set the 2027 employee premium rate at $1.64 per $100 of insurable earnings, one cent higher than 2026. Employers pay 1.4 times the employee premium. Quebec rates are lower because the Quebec Parental Insurance Plan (QPIP) covers parental benefits there.

One cent sounds trivial. Applied to every insurable dollar across every pay run, it’s a line worth getting right, and plenty of businesses don’t. In a 2026 survey of 1,000 Canadian business leaders, 62% said they’d had payroll errors that needed manual correction in the past 12 months.¹

What Ottawa has already signalled

The biggest small business tax item likely to show up in Budget 2026 has already been announced: the Productivity Mega Deduction.

Introduced on 15 September 2026, the proposed deduction would let businesses write off the full cost of most depreciable capital property in the year it becomes available for use. Normally, that cost is spread over several years through the capital cost allowance system. It would cover eligible property acquired on or after 15 September 2026, and it’s designed to be permanent. It builds on the Productivity Super-Deduction from Budget 2025, which covered roughly 15% of capital investment.

In plain terms, if you’ve been eyeing a delivery van, new kitchen equipment or a round of laptops, the timing of that purchase could change your tax bill. There’s one catch for sole proprietors and partnerships with individual partners: the deduction can’t be used to create or increase a loss. It’s also still a proposal, so watch for the budget to confirm the details before you build a purchase plan around it.

One more signal if succession is on your mind. The $10 million capital gains exemption for selling a business to an employee ownership trust or worker co-operative was set to expire at the end of 2026. Bill C-30 made it permanent.

Planning a January hire and want onboarding and payroll sorted in one place?

What small businesses are asking for in Budget 2026

The measures small businesses want most are also the least certain, because each one costs money Ottawa may not have.

In its 2026 pre-budget submission, the Canadian Federation of Independent Business (CFIB) asked the government to cut the small business tax rate from 9% to 6%. It also wants the small business deduction threshold raised from $500,000 to $700,000 and indexed to inflation, plus immediate expensing for all types of capital investment. Earlier this year, CFIB also pushed for a lower EI premium rate for smaller employers.

The money is the sticking point. Higher oil prices lifted federal revenue this year, but economists told The Globe and Mail that most of that windfall has already been spent, leaving little room for new measures.

Confidence also tracks company size. In KPMG’s annual pre-budget survey, 82% of businesses earning $1 billion or more expected the budget to support their growth. Among businesses earning $10 million to $100 million, that figure was 54%. The same survey of 346 leaders found 51% of businesses under $100 million were adapting well to higher trade barriers, compared with 77% of the largest firms. If you run a 12-person team, you’re further still from the conversation, which is why the planning you control matters more than the headlines you don’t.

How to prepare your business before budget day

You can do almost all of your budget prep now, using the changes that are already certain. Rule changes have become routine: 77% of Canadian business leaders say they had to update payroll or HR systems because of regulatory change in the past 12 months. Here’s where to start.

1. Sort the news into three piles. When the budget lands, file each measure as law, proposal or wishlist. Proposals need legislation and can change before they take effect, so hold off on rebuilding your plan around a headline.
2. Confirm your payroll is ready for 1 January. If you use payroll software built for Canadian rules, check with your provider that the new CPP base rate and EI premium apply from your first pay run of 2027. If you run payroll on spreadsheets, update the rates yourself and have someone double-check that first run.
3. Tell your team what’s changing. Most employees outside Quebec will see slightly smaller CPP deductions in January. A two-line note before payday saves you a dozen questions, and it’s worth adding that their future CPP benefits stay the same.
4. Time big purchases with your accountant. If the Productivity Mega Deduction is confirmed, the date you buy equipment could matter. Get advice before you sign anything large.
5. Revisit your hiring plan. In the same survey, 56% of Canadian business leaders said they’d delayed or cancelled a hire because of admin capacity.³ If a January hire is on the table, sort the contract, onboarding and first pay run before the holidays so your new starter is ready to go whatever budget week brings.
6. Lock in year-end dates. T4 slips and the T4 Summary are due by the last day of February, and Quebec employers also file RL-1 slips. January’s rate changes and February’s filings arrive back-to-back, so get both in the calendar now.
7. Block an hour for budget day. Read your accountant’s summary or the budget’s tax measures annex the next morning. Look for anything touching the small business deduction, payroll costs or hiring incentives.

Plan for what’s certain, watch for the rest

Budget 2026 will bring headlines, and a few may matter to your business. The change your team will feel first, though, has been law since June. A 23-year-old number on every pay stub moves on 1 January, and owners who’ve prepared for it get to read the budget with a coffee and a clear head.

That’s the quiet advantage of getting the basics right early. When CPP, EI and income tax calculations and remittances are built into the payroll you already run, a rate change becomes something you confirm. Employment Hero helps Canadian businesses keep hiring, HR and payroll in one place, so you can spend budget week thinking about the opportunities in it.

Want to see how your first pay run of 2027 could look?