As the 2026 Montreal budget introduces a new wave of fiscal pressure on the business community, Leyton is reinforcing its commitment to helping local innovators protect their margins.
While municipal costs are rising, the synchronization of federal tax credits and provincial incentives remains the most effective tool for maintaining a competitive edge.
The budget for 2026, tabled this week by Mayor Soraya Martinez Ferrada, totals $7.67 billion, a 5.4% increase over last year. Central to this plan is a significant shift in the tax burden: an average 3.8% increase for residential property taxes and a 3.4% increase for the non-residential sector.
Addressing the city’s financial constraints, the Mayor noted the necessity of this “rigorous” approach:
“Let’s be honest, the city’s credit card limit was pretty much exceeded,” stated Martinez Ferrada during the presentation.
While the city targets $79 million in savings and a reduction of 1,000 employees, businesses, particularly in boroughs like Verdun (+5.4%), Rivière-des-Prairies–Pointe-aux-Trembles (+5.6%), and L’Île-Bizard–Sainte-Geneviève (+6.3%) are seeing their fixed costs climb well beyond the 2026 inflation forecast of 2.1%.
Converting Fiscal Challenges into Innovation Funding
At Leyton, we view this municipal restructuring not just as a cost increase, but as a catalyst for firms to optimize their broader tax strategy.
To offset the $390 million jump in city spending, Montreal businesses should prioritize three critical pillars of innovation funding:
- The New $6M SR&ED Threshold: The federal government’s doubling of the expenditure limit for the Scientific Research and Experimental Development (SR&ED) program allows CCPCs to claim a 35% refundable credit on up to $6 million in expenses. For many Montreal SMEs, a maximized claim can yield a $2.1 million cash refund, effectively neutralizing the impact of property tax hikes.
- Restored Capital Expenditure Credits: For the first time since 2014, machinery and equipment used for R&D (acquired after Dec 16, 2024) are once again eligible for tax credits. This allows manufacturers to convert their 2026 infrastructure investments into immediate cash flow.
- Clean Economy & Green Revitalization: With $72 million allocated by the city for soil decontamination in the East end and a $25 million revitalization fund, companies in construction and environment have a unique window to pair municipal grants with the 30% Clean Technology ITC.
The 2026 Montreal budget highlights a city in transition, investing in debt service, public security and a 20% increase in water network repairs.
By leveraging Leyton’s expertise in tax credits and specialized incentives, Montreal businesses can ensure that their innovation roadmap remains unfunded by municipal debt and fueled by their own discoveries.
Contact one of our experts today to get a free consultation for your business!
