Newfoundland and Labrador 2025 Budget: Tax Credits and Business Incentives

The Newfoundland and Labrador government has released their 2025–2026 budget, which includes various provincial government funding programs aimed at bolstering economic growth and supporting the business community. This budget introduces several initiatives and top-ups to existing funding programs that are designed to enhance the province’s business environment and stimulate development across various sectors.​

New Business Funding Programs in the 2025–2026 Budget

While the budget encompasses a broad range of fiscal measures, several key initiatives are particularly relevant to Newfoundland and Labrador businesses.

Newfoundland and Labrador Tariff Relief

The province is investing $35 million to drive economic development through research, development, commercialization, investment attraction, and business growth initiatives. Support for local businesses includes maintaining the reduced small business tax rate at 2.5%, increasing product compensation for Liquor Express retailers and brewers by $800,000, and allocating $10 million in loan funding to assist locally owned restaurants.

Business Growth Program

The Department of Industry, Energy and Technology offers the Business Growth Program, providing nonrepayable contributions to assist businesses in starting, innovating, scaling, and improving sales locally, nationally, or internationally. The program typically offers up to 50% of eligible costs, with a maximum of $200,000 over 24 months per project. Development and commercialization projects may be considered for higher amounts, up to $750,000 over multiple years.

Extension of Gasoline and Diesel Tax Reduction

To alleviate operational costs for businesses, the government has extended the tax reduction on gasoline and diesel by 7 cents per litre until March 31, 2026. This measure maintains a lower price at the pump by 8.05 cents per litre, including harmonised sales tax (HST), providing continued relief for businesses reliant on transportation.

Continued Support for Infrastructure Projects

The government has reaffirmed its commitment to infrastructure development by continuing to invite applications for the Municipal Capital Works (MCW) program. This program supports cost-shared projects for municipal infrastructure, including water and wastewater treatment, roads, and recreational facilities. Eligible applicants include municipalities, local service districts, and Inuit Community Governments. The application guide and submission requirements are available on the Department of Transportation and Infrastructure’s website. This is in addition to Canada’s other federal responses to tariffs and the EDC Trade Impact Program.

Funding Towards Existing Tax Credits and Incentives

In addition to the new budgetary measures, Newfoundland and Labrador continues to offer a suite of tax credits and incentives aimed at fostering business growth and innovation. By strategically utilizing these programs, businesses can reduce operational costs, invest in modernization, and enhance their competitive edge.

1. Green Technology Tax Credit (GTTC)

The Green Technology Tax Credit (GTTC) provides a 20% refundable tax credit to Canadian-controlled private corporations investing in eligible green technology assets, such as equipment for energy conservation and clean energy generation. This initiative lowers the cost barrier for adopting sustainable technologies, promoting environmental responsibility and potentially leading to long-term operational savings. ​

2. Manufacturing and Processing Investment Tax Credit

This credit offers a 10% tax benefit on investments in eligible manufacturing and processing equipment. For Canadian-controlled private corporations, up to 40% of the credit is refundable. By reducing the effective cost of acquiring new machinery, businesses can modernize operations, improve productivity, and strengthen market competitiveness. ​This is in addition to other Canadian federal manufacturing funding programs.

3. Interactive Digital Media (IDM) Tax Credit

Aimed at companies developing interactive digital media products, this refundable tax credit covers 40% of qualifying expenditures, including eligible salaries and remuneration. With caps of $40,000 per employee annually and $2 million per company per year, the IDM Tax Credit supports talent acquisition and retention, enhances project feasibility, and contributes to the growth of the digital media sector. 

4. Direct Equity Tax Credit (DETC)

The DETC encourages private investment in eligible small businesses by offering a provincial income tax credit to investors. Investments in businesses outside the Northeast Avalon region qualify for a 35% credit, while those within the region receive a 20% credit. This incentive makes businesses more attractive to potential investors, facilitating access to essential capital for growth and expansion.

5. Scientific Research and Experimental Development (SR&ED) Tax Credit

This refundable tax credit allows businesses to claim 15% of eligible research and development (R&D) expenditures that qualify for the federal SR&ED tax credits. By offsetting R&D costs, the credit encourages innovation, helps mitigate financial risks associated with experimental projects, and supports the development of unique products or services, thereby enhancing market differentiation. ​

Apply for Newfoundland and Labrador Tax Credits, Grants, and Loan Funding Programs

The 2025–2026 budget reflects the government’s ongoing commitment to creating a conducive environment for business growth and economic diversification in Newfoundland and Labrador. By investing in infrastructure, extending tax relief measures, and offering various support programs, the province aims to foster a resilient and prosperous business community.​

Local Newfoundland and Labrador businesses are encouraged to speak with a member of our Canadian government funding experts to explore these funding opportunities and assess how your company can leverage the available programs to support your growth and development objectives.