Prime Minister Carney Introduces Tax ‘Mega Deductions’ For Businesses— Here’s What It Means

At the first Canada Investment Summit, Prime Minister Mark Carney announced that the federal government will be introducing the new Productivity Mega Deduction.

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This tax deduction builds off Budget 2025’s previously successful Productivity Super-Deduction, which allowed businesses to immediately deduct 100% of the costs of eligible new investments. Now, it’s being increased.

Canada’s Productivity Mega Deduction

The new Productivity Mega Deduction is a tax incentive that “will increase the amount of assets covered from roughly 15% of assets to more than 65%.” This includes a range of investments, including fibre-optic cable, oil and gas pipelines, software, computer equipment, research and development, mining property, aircraft and vehicles, roads, rail track, patents, and bridges.

A press release details,

Canada has what the world wants. We are a superpower in both clean and conventional energy, with vast deposits of critical minerals. We are the best-connected economy in the world with free trade deals with countries covering 1.5 billion consumers, and we are by far the most competitive country in the G7 for new business investment. We have one of the world’s most educated workforces, the lowest net debt-to-GDP ratio in the G7, and the fiscal capacity to act decisively. Canada is leveraging these strengths to catalyse $1 trillion of new investment and create more growth, opportunity, and prosperity for Canadians.

Notably, the federal government is also making “immediate expensing permanent,” allowing businesses to recoup these costs sooner. This incentive will lower the after-tax cost of investing, boosting capital investments across Canada.

“Canada’s marginal effective tax rate on new business investment will fall from roughly 13% to 6.4%” as a result of this. This is reportedly the lowest of any major economy in the world, and “less than half the rate in the United States.”