OntarioBill 12First Reading
Bill 12: Cutting Taxes on Small Businesses Act, 2025
Sponsor: Bowman, StephanieIntroduced May 6, 2025Last checked August 28, 2026
Read the official text on ola.orgOfficial version — Legislative Assembly of Ontario
What this bill does
This Ontario bill increases the small business tax deduction rate from 8.3% to 9.9% and raises the business income limit eligible for the deduction from $500,000 to $600,000, effective January 1, 2026.
Plain-language summary by Legisail.
Business impact
Tax
This bill directly benefits small incorporated businesses operating in Ontario that earn active business income. The typical affected business is a Canadian-controlled private corporation — think a local shop owner, trades contractor, professional services firm, or tech startup — earning up to $600,000 in annual taxable income. These businesses will see a meaningful reduction in their provincial corporate income tax, with the deduction rate increasing by 1.6 percentage points and the eligible income cap rising by $100,000. Smaller businesses earning under $500,000 benefit from the rate cut alone, while those earning between $500,000 and $600,000 get an additional benefit from the expanded limit.
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Where this bill is
First ReadingMay 6, 2025
Next: Second Reading debate
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