Quebec Business Taxes: What Changed in 2026 and How Companies Should Prepare

The year 2026 marks one of the most significant shifts in both Quebec business taxes and federal tax administration in over a decade. Montreal businesses, SMEs and corporations across Quebec are now operating under a stricter compliance environment with updated Quebec corporate tax rules, adjusted payroll contribution thresholds, enhanced TPS/TVQ compliance obligations, evolving capital cost allowance rules, and notable changes to Quebec’s Small Business Deduction (SBD) conditions.

As Revenu Québec increases audit enforcement across Montreal and Quebec, companies must strengthen their corporate tax planning, bookkeeping accuracy, payroll controls and overall financial governance.

This article provides an in-depth analysis of the 2026 Montreal tax landscape, explaining regulatory updates, financial implications, and strategic recommendations for corporations, SMEs and professional practices operating within Quebec and Canada.

Workspace with accounting documents and laptop in Montreal

1. Corporate Tax Rates in Quebec: Stability Masking Stricter Controls

While Quebec corporate tax rates 2026 remain stable, administrative controls and compliance expectations have tightened significantly.

1.1 Corporate Tax Rate Stability

For 2026, Quebec maintains the well-established combined rate:

• Federal corporate tax: 15%

• Quebec corporate tax: 11.5%

• Total corporate tax rate in Quebec: 26.5%

However, despite the apparent stability, effective corporate tax costs for many Quebec businesses may rise due to tougher access rules, compliance expectations and reduced tolerance for errors.

2. Major 2026 Changes to the Quebec Small Business Deduction (SBD)

The Quebec Small Business Deduction 2026 remains one of the most valuable incentives allowing eligible SMEs to significantly reduce their Quebec corporate taxes.

2.1 Updated Eligibility

Businesses must now demonstrate:

1. More than 50% of labour costs incurred in Quebec

2. Substantial Quebec operational presence including:

• Permanent establishment

• Active business operations

• Full-time employees

3. Active business income (not passive investment income)

   
   

2.2 Financial Impact

Losing the SBD in Quebec can increase taxes by $20,000 to $50,000 annually.

Industries at risk include:

• Technology companies hiring remote staff outside Quebec

• Professional services using subcontractors

• E-commerce businesses

• Consultants without strong Montreal presence

This makes professional tax planning in Quebec more important than ever.

3. Expanded 2026 TPS/TVQ Compliance Requirements

2026 is expected to be another aggressive enforcement year for TPS/TVQ in Quebec, reinforcing digital transparency and reducing undeclared revenues.

3.1 Mandatory Digital E-Invoicing — Phase Expansion

Additional industries must now comply with Quebec e-invoicing requirements, including:

• Health and wellness clinics

• Beauty and personal care

• Repair services

• Gyms and training facilities

• Education and tutoring

• Consulting services

3.1.1 Penalties

• $300 to $5,000 fines

• Increased audit risk

• Assessment of undeclared revenue

  
  

Revenu Québec audits in 2026 are expected to rise significantly.

4. Payroll Tax Changes for Quebec Employers in 2026

Montreal employers face increased payroll costs due to adjustments in:

• QPP contributions

• Quebec Parental Insurance (QPIP) rates

• CNESST contributions

Businesses with larger payrolls in Quebec will feel noticeable financial impact.

5. Federal Tax Updates Affecting Montreal Corporations in 2026

Key changes affecting Canadian corporations and Quebec businesses include:

• Reduced accelerated Capital Cost Allowance (CCA) benefits

• Stricter trust reporting rules including bare trusts

• Higher penalties for non-compliance

This impacts real estate structures, family trusts, holding corporations and private companies.

6. Quebec Tax Credits and Incentives Updated for 2026

Quebec remains one of the most generous regions in Canada for business tax incentives, including:

6.1 Quebec Innovation Tax Credit (C3i)

• Enhanced eligibility

• Strong benefits for technology, manufacturing, automation, digital transformation investments

6.2 Startup Hiring Credit

Supporting innovative startups in Quebec through structured hiring incentives.

7. Increased Revenu Québec Audit Enforcement in 2026

Target sectors include:

• Construction

• Retail and hospitality

• Clinics

• Digital businesses

• Gig economy

With AI-powered audit systems, Montreal businesses must ensure impeccable financial records and strong bookkeeping in Quebec.

8. Financial & Operational Implications for Montreal Businesses

Businesses will face:

• Higher operating costs

• Increased compliance workload

• Greater reliance on professional accountants in Quebec

9. Strategic Recommendations for 2026

• Conduct a comprehensive Quebec tax exposure review

• Assess SBD eligibility

• Upgrade TPS/TVQ compliant systems

• Strengthen bookkeeping

• Implement forward-looking corporate tax planning Montreal strategies

• Work with an experienced Quebec accounting firm

A qualified firm such as Service CFF can support:

• Corporate tax planning Montreal

• Payroll management Montreal

• Bookkeeping and compliance

• TPS/TVQ and GST/QST filing

• Audit defense and preparation

• Trust reporting

• Quebec tax credits optimization

The 2026 Quebec tax environment brings complexity, stricter rules and serious enforcement pressure, but also powerful opportunities for businesses that plan strategically. Companies that adopt proactive tax planning, trusted accounting support and strong compliance systems will protect profitability, reduce financial risk and maintain competitive strength across Quebec and Canada.