Quebec Budget: Changes for Electric Car Owners
- A look at the Quebec budget measures affecting insurance, taxes, electric vehicles and more.
- Quebec residents can expect to pay more for insurance soon.
- This change applies to damage insurance, including residential and automobile policies, and also collective insurance plans offered through employers.
Quebec Budget Measures: Impact on Yoru Finances
Table of Contents
- Quebec Budget Measures: Impact on Yoru Finances
- Insurance premium Tax Increase
- Reduced Medical Expense Eligibility for Tax Credit
- Elimination of the “Tax Shield”
- Electric Vehicle Incentives Reinstated
- New Fees for Electric Vehicle Owners
- Revised Luxury Vehicle Tax Threshold
- Stricter Access to Childcare tax Credit
- Capital Gains tax Changes Still Under Consideration
A look at the Quebec budget measures affecting insurance, taxes, electric vehicles and more.
Quebec residents can expect to pay more for insurance soon. Currently, insurance premiums are subject to a tax of 9%. Though, starting Jan. 1, 2027, this tax will align with the Quebec sales tax (TVQ) rate of 9.975%.
This change applies to damage insurance, including residential and automobile policies, and also collective insurance plans offered through employers. Life insurance policies will remain exempt.
For instance, an annual insurance premium of $4,000 will increase by approximately $39 per year due to the rate change.
Reduced Medical Expense Eligibility for Tax Credit
The range of eligible medical expenses for tax credits is narrowing. Quebec offers two tax credits for medical expenses: a non-refundable credit and a refundable credit for lower-income taxpayers.
From 2026, only expenses paid to practitioners who are part of a professional order in Quebec will qualify for these tax credits.
Consequently,expenses billed by homeopaths,osteopaths,naturopaths,and phytotherapists will no longer be eligible.
However, as osteopaths are expected to establish a professional order soon, medical expenses paid to them will become eligible again.
Elimination of the “Tax Shield”
The “tax shield” will be discontinued on Jan. 1, 2026. This refundable tax credit is designed to compensate taxpayers whose employment income increases, offsetting the loss of work premiums and childcare tax credits.
Approximately 140,000 individuals currently benefit from this measure,with an average loss of $244 per taxpayer.
Electric Vehicle Incentives Reinstated
The “Roulez vert” program is back. Quebec’s subsidies for purchasing electric vehicles and installing charging stations will be available again starting April 1, 2025. the program was temporarily suspended earlier in the year due to funding shortages.
A $4,000 discount will be available for the purchase of a new electric vehicle. This incentive will be reduced by half to $2,000 in 2026 and will be completely phased out in 2027.
New Fees for Electric Vehicle Owners
New costs are being introduced for electric car owners.
Unlike drivers of gasoline-powered vehicles who pay fuel taxes that fund road infrastructure and public transportation, electric and hybrid vehicle owners have not been subject to this tax.
However, starting Jan. 1, 2027, electric vehicle owners will pay a new annual contribution of $125, while owners of rechargeable hybrid vehicles will pay $62.50. These amounts will be indexed to inflation annually.
Additionally,free access to toll bridges and crossings for vehicles with green license plates will end on April 1,2027.
Revised Luxury Vehicle Tax Threshold
Quebec is adjusting the threshold at which a motor vehicle is considered a luxury vehicle.
The current threshold of $40,000 will increase to $62,500 in 2027. Vehicles exceeding this threshold are subject to a tax equivalent to 1% of the value exceeding the threshold. For example, a vehicle with a market value of $70,000 will see its tax payable drop from $300 to $75, resulting in a saving of $225.
The government cites the sharp increase in car prices in recent years as justification, arguing that a $40,000 vehicle can no longer be considered a luxury vehicle.
Stricter Access to Childcare tax Credit
Quebec is tightening access to the refundable tax credit for childcare costs.Currently, parents can claim this credit until their children turn 16. This age limit will be lowered to 14 years starting in 2026.
Exceptions will remain for children with serious and prolonged mental or physical impairments, for whom there will be no age limit.
Capital Gains tax Changes Still Under Consideration
Despite promises from leaders of the two main political parties in Ottawa to abolish changes to capital gains taxation, Quebec is still planning for their implementation. The province will maintain this position unless the federal government officially reverses the inclusion rate review.
As a reminder, the federal government announced that the portion of capital gains exceeding $250,000 would be taxed at a rate of two-thirds. The measure, initially slated to take affect in June 2024, was postponed to Jan. 1, 2026.
# Quebec Budget Measures: Impact on Your Finances
A look at the Quebec budget measures affecting insurance, taxes, electric vehicles and more.
## 1. How will Quebec’s new budget affect my insurance premiums?
Quebec residents can expect to see an increase in their insurance costs. Starting January 1, 2027, the tax on insurance premiums will rise from the current 9% to 9.975%, aligning with the Quebec Sales Tax (QST) rate.
* This change applies to various types of damage insurance, including:
* Residential policies
* Automobile policies
* Collective insurance plans offered through employers
* Life insurance policies will remain exempt from this tax increase.
* For example, if you pay an annual insurance premium of $4,000, you can anticipate an increase of approximately $39 per year due to this rate change.
## 2. What changes are being made to the electric Vehicle (EV) incentives?
The Quebec government is reinstating the “Roulez vert” program, which offers subsidies for purchasing electric vehicles. This program will restart on April 1, 2025.
* A $4,000 rebate will be available for the purchase of a new electric vehicle.
* This amount will be reduced to $2,000 in 2026.
* The incentive will be phased out completely in 2027.
## 3. Are there any new fees for electric vehicle owners?
Yes, starting January 1, 2027, new fees will be introduced for electric vehicle owners in Quebec. These are designed to contribute towards road infrastructure and public transportation,similar to fuel taxes paid by gasoline-powered vehicle drivers.
* Electric vehicle owners will pay an annual contribution of $125.
* Owners of rechargeable hybrid vehicles will pay $62.50 annually.
* These amounts will be adjusted annually to account for inflation.
* Additionally, free access to toll bridges and crossings for vehicles with green license plates will end on April 1, 2027.
## 4. How is the definition of a “luxury vehicle” changing?
Quebec is adjusting the threshold for what is considered a luxury vehicle.
* The current threshold of $40,000 will increase to $62,500 in 2027.
* Vehicles exceeding this new threshold will be subject to a tax of 1% of the value exceeding the threshold.
* Such as, a vehicle valued at $70,000 will see its tax decrease from $300 to $75, resulting in a saving of $225.
## 5. Will the tax credit for medical expenses change?
Yes, the range of eligible medical expenses for tax credits is narrowing.
* Starting in 2026, only expenses paid to practitioners who are part of a professional order in Quebec will qualify for these tax credits.
* This means expenses billed by homeopaths, osteopaths, naturopaths, and phytotherapists will no longer be eligible, effective from 2026.
* However,if osteopaths establish a professional order (as is anticipated),expenses billed by them may become eligible again.
## 6. What is the “Tax Shield” and how is it affected?
The “tax shield,” a refundable tax credit designed to help offset the loss of work premiums and childcare tax credits when employment income increases, will be discontinued.
* This change takes effect on January 1, 2026.
* Approximately 140,000 individuals currently benefit from the tax shield.
* The average loss is estimated to be $244 per taxpayer.
## 7.Are there any changes to childcare tax credits?
yes, access to the refundable tax credit for childcare costs is being tightened.
* Currently, parents can claim this credit until their children turn 16.
* This age limit will be lowered to 14 years starting in 2026.
* Exceptions will be made for children with serious and prolonged mental or physical impairments; there will be no age limit for these cases.
## 8.Are there any changes being considered for capital gains taxes?
Yes, The Quebec government is still planning to implement changes to capital gains taxation, nonetheless of promises from other political parties in Ottawa to abolish them.
* The federal government announced that the portion of capital gains exceeding $250,000 would be taxed at a rate of two-thirds.
* This measure was initially scheduled to take effect in June 2024 but was postponed to January 1, 2026.
## Summary of Key Budget changes
The following table summarizes essential changes outlined above.
| Measure | Effective Date | Impact |
| :————————————- | :————— | :————————————————————————— |
| Insurance Premium Tax | January 1, 2027 | increase Tax rate from current 9% to 9.975% |
| EV Rebates | April 1, 2025 | $4,000 for new EVs in 2025,
$2,000 in 2026,
Phased out in 2027 |
| EV Fees | January 1, 2027 | $125 annual fee for EVs, $62.50 for Hybrid EVs |
| Luxury Vehicle Threshold | 2027 | Increased from $40,000 to $62,500 |
| Medical Expense Eligibility | 2026 | Only expenses paid to members of a professional order will be eligible |
| Tax Shield | January 1, 2026 | Discontinued |
| Childcare Tax credit Age Limit | 2026 | Reduced from 16 to 14 years |
| Capital Gains Tax | January 1, 2026 | implementation will be maintained, unless reversed by Federal government |
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Disclaimer: This article provides a summary of key budget measures and should not be considered financial advice. Consult with a qualified professional for personalized guidance.