Summary: Prince Edward Island Budget 2025

The budget includes reductions to the general corporate tax rate, increases to the small business deduction threshold, increases to personal income tax brackets, and support for businesses impacted by US tariffs. 

The province’s deficit for the 2024-25 fiscal year is estimated at $166 million compared to the $85 million deficit projected in the previous budget. 

Fiscal projections for the next three years are as follows:

The 2025-26 projected deficit of $184 million includes a $32 million contingency related to enacted and proposed US tariffs.

Business tax measures

Corporate tax rates

The general corporate tax rate will be reduced to 15% (from 16%). In addition, the provincial small business threshold will be increased to $600,000 (from $500,000). These changes will take effect on July 1, 2025. 

Combined federal and provincial corporate tax rates

Tariff Working Capital Assistance Program

This new program offers low-interest working capital loans of up to $500,000 for eligible businesses impacted by tariffs. More information on the program and eligibility criteria can be found on the province’s website. 

Support for the oyster industry

The province will establish a genome surveillance project and establish a $3 million contingency fund to help support the oyster industry with challenges, such as Multinucleate sphere unknown (MSX). Additional details will be released at a later date. 

Personal tax measures

Personal income tax rates

PEI Budget 2025 makes no changes to the provincial tax rates but increases certain tax credits. The basic personal amount rises to $14,650 (from $14,250), the spouse or equivalent amount to $12,443 (from $12,103), and the low-income tax reduction to $22,650 (from $22,250), all of which are effective for the 2025 personal tax year. In addition, the income tax bracket thresholds are being increased for 2026. 

The indexed combined personal tax brackets and the respective marginal tax rates for 2025 and 2026 are as follows:

Sales and other tax measures

Health tax on tobacco

The health tax on tobacco will be increased to $0.30 per cigarette (from $0.2952) effective April 28, 2025.

Real Property Transfer Tax

The sale of real property for the First-Time Homebuyers exemption for residents of PEI will be subject to Real Property Transfer Tax on a rate of 2% on the value of the property exceeding $1 million. Previously first-time Homebuyers were exempt from this tax. The sale of real property not eligible for this exemption will be subject to an increase in the tax to 2.0% (from 1%) on the value over $1 million. Both changes are effective April 28, 2025

Other notable measures

Education – Each of the George Coles Bursary and Marion L. Reid Bursary will increase to $3,500 (from $3,200).

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

Visit our Budget 2025 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.}