A tax cut for Albertans — that’s the promise Danielle Smith made when she ran for premier in 2023.
On Thursday, amid financial uncertainty facing the province, the UCP government said it would be following through on that commitment.
When Alberta Finance Minister Nate Horner rose in the Alberta Legislature to announce the details of the 2025/26 budget — included in it was a promise to implement a new eight per cent personal tax bracket for income up to $60,000.
Horner said it will cost the province about $1.2 billion per year and will save taxpayers about $750 on their first $60,000 of income.
Albert Finance Minister Nate Horner said the income tax cut in the 2025/26 budget will save an individual $750 per year and families $1,500 per year.
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The tax cut comes as Alberta’s new budget projects a deficit of $5.2 billion and perhaps even higher if U.S. President Donald Trump follows through on his promise to implement tariffs on Canadian imports.
“Beyond the fact that it was a campaign promise, I think now may be the most important time to bring if forward,” Horner said.
“It’s one thing to look at what Alberta can withstand through all this uncertainty and forecast from a government of Alberta revenue perspective — but it’s the same uncertainty and has the same potential consequence for Alberta households so we think it’s important now to provide them with some affordability tools to try to withstand this with us.”
The Alberta government’s 2025/26 budget forecasts an oil price of $68 per barrell for west Texas crude, compared to this year’s price of $77.83 per bbl.
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Along with the $750 tax break, the budget also contains some offsetting tax increases, including a hike in educational property tax of $239 per year for the average homeowner in Calgary and $92 per year in Edmonton. The government expects to collect about $200 million more per year as a result of the increase.
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The province is also increasing a number of other fees and licenses for things such as businesses, charities, motor vehicles, and court fees.
Horner defended the increases at the same time he announced the income tax cut by saying they’re bring Alberta in line with other provinces.
“The income tax cut is substantial for individuals and for families,” Horner said.
“The fee increases, we did look at doing more of a cost recovery structure — or this is a fee that hasn’t been increased in 30 years — that’s kind of the lens that we took to it.
“We don’t want to go from a 30-year outdated fee to putting us above Saskatchewan, so we wanted to make sure we were still below everyone else, but just trying to get things up to date.”
The province is also increasing spending on the low-income transit pass — from $16 million in this year’s budget to $21 million next year.
The Alberta government’s 2025/26 budget forecasts revenues of $74 billion, a drop of $6.6 billion from this year’s budget.
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Overall, provincial government revenue is forecast at $74.1 billion, a drop of $6.6 billion — while expenditures are forecast to be $75.3 billion — but that includes a $4 billion contingency to be used to cover unexpected expenses like disasters or the cost of collective agreement settlements.
For generations, Alberta’s finances have been tied to the rollercoaster ride that is oil and gas prices and royalties. That has not changed in 2025. The government is forecasting price of a barrel of oil next year to be $68 — compared to this year’s price of $77.83 per barrel.
With the threat of tariffs looming large over next year’s budget, the Alberta government forecasts a deficit between $2.9 billion and $8.7 billion, depending on the size of the tariffs.
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But the threat of U.S. tariffs looms large over the government’s projections — the word “tariff” is mentioned at least 179 times in the 176-page document.
The $5.2 billion deficit the government is forecasting assumes a 15 per cent average tariff, but it also provides a best-case scenario of no tariffs and a deficit of $2.9 billion, and a worst-case scenario of a 25 per cent tariff that would cause the deficit to balloon to $8.7 billion.
