Nova Scotia Budget 2026

Notably, the budget includes measures to increase the financial institutions capital tax, extend the Capital Investment Tax Credit, and introduce a new levy on electric and hybrid vehicles. The budget doesn’t make changes to corporate or personal tax rates. 

NS Budget 2026 revises the projected 2025-26 deficit to $1.249 billion based on the final forecast, compared to the $897.5 million deficit (after contingency) originally budgeted for the 2025-26 fiscal year.  

Fiscal projections for the next four years are as follows:

*The contingency amounts are intended to account for unexpected changes in expenses or revenues, such as tariffs, disasters, emergencies, and emerging priorities.

Business tax measures

Business tax rate and threshold

There are no new changes to Nova Scotia’s corporate tax rates or small business threshold. The small business threshold refers to the maximum amount of active business income eligible for the small business corporate tax rate. Nova Scotia’s small business threshold has been $700,000 since April 1, 2025, while the federal small business threshold remains at $500,000.   

Combined federal and provincial corporate tax rates

Financial institutions capital tax

The budget increases the financial institutions capital tax rate to 6% (from 4%). This tax is levied on taxable capital of banks, loans, and trust corporations with a permanent establishment in the province. This tax doesn’t apply to credit unions or life insurance corporations. This increased rate applies to taxation years starting on or after November 1, 2026.

Capital Investment Tax Credit 

The Capital Investment Tax Credit has been extended to December 31, 2035. For additional information on this credit, see the province's website.

Personal tax measures

Personal income tax rates

NS Budget 2026 doesn’t change personal income tax rates. The personal income tax brackets and certain non-refundable tax credits are subject to an annual indexing for inflation, a measure introduced in NS Budget 2024. 

The combined federal and provincial personal tax brackets and the respective marginal tax rates for 2026 are as follows:  

The top combined federal and provincial marginal tax rates for 2026 are as follows:

Sales tax and excise tax measures

Vaping product tax

The budget introduces a new vaping product duty that will be a part of the federal system, effective April 1, 2026. The new provincial duty will equal the federal duty charged on vaping products and will be collected by the federal government, as follows:

• $1.12 per 2ml/gr of vaping substance for the first 10ml/gr of vaping substance in a device or container
• $1.12 per 10ml/gr for any additional amount

Nova Scotia’s existing vaping product tax will end on March 31, 2026.

Electric and hybrid vehicle levy

NS Budget 2026 introduces a new electric and hybrid vehicle levy, effective October 1, 2026. Taxpayers will be required to pay the following levy when a vehicle is first registered and then every two years when the registration is renewed. For fully electric vehicles, the levy will be $500 and for electric-hybrid vehicles, it will be $250.

Have questions? Let’s talk. Contact your local advisor or reach out to us here. 

Visit our Budget 2026 hub to learn more about all federal and provincial budgets. 

Disclaimer 
_{The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.}