Alberta’s 2025/26 budget includes a $5.2 billion deficit and cuts the personal income tax rate to eight per cent two years ahead of schedule. It also assumes an average 15 per cent tariff on all goods, and 10 per cent tariff on energy products.
American President Donald Trump has repeatedly said he will impose a 25 per cent tariff on all Canadian goods.
According to Minister of Finance Nate Horner, the government felt 15 per cent was a more sustainable rate for the United States economy.
“When you don't know the duration, you know it could change. It could be 25 per cent for a few months and come back to zero. So this has to be an average of the entire fiscal year,” said Horner.
Other assumptions in the government’s calculation include an average oil price of $68 USD per barrel. A $1 drop in the price of West Texas Intermediate is equal to a $750 million cut to Alberta government revenues.
Deficit spending projected to continue for three years
Alberta’s Fiscal Plan 2025-28 does not include a plan to balance the budget, despite a legislated requirement to return to balance within three years of posting a deficit.
The plan projects a deficit of $5.2 billion in 25/26, $2.4 billion in 26/27, and $2 billion in 27/28.
Horner cited record population growth of 4.4 per cent in 2024 with the province expected to reach five million people in 2025 as the reason for the continued deficit.
“We’ve made a deliberate choice to accelerate school construction, to be there to support our public services through this, and we still haven’t caught up. And I should just say that this is a good thing. I would much rather deal with this than stagnation and decline,” said Horner.
Asked how he would balance the budget, Horner said it would mean looking at both the expense and revenue sides of the ledger “in a very deliberate way.”
“We can get to balance? . . . What are we prepared to not do? Or what are we prepared to ask from Albertans to pay for what we're not prepared to go without?”
Lower income taxes, but higher fees
The governing United Conservative Party had previously announced a plan to reduce income taxes to nine per cent in 2026 and eight per cent in 2027.
The 25/26 budget skips straight to the eight per cent — a reduction of $600 million to provincial revenues in 25/26. According to government estimates, it will reflect a $750 reduction in the tax bill for each Albertan, on average.
The education property tax levy on the other hand will be going up. This tax is collected by municipalities on behalf the province and based on assessed property value.
Residential and farm properties will see their education tax increase by 6.25 per cent to $2.72/$1,000 of equalized assessment. Non-residential properties will increase by 6.38 per cent to $4.00/$1,000 of equalized assessment.
Other fees like the cost of court applications and record searches will be increasing from $10 - $250 per search to $25 - $300 per search. The Motor Vehicle Accident Claims Fee will double from $6 to $12. And the application fee to immigrate to Alberta will increase from $840 to $1,500, as well as the introduction of fees to have international qualifications assessed.
Horner said the fee increases compared to the savings from the income tax cut are on dramatically different scales and the fees being changed are ones where the ministry suggested a cost recovery structure might be more appropriate.
“We don't want to go from a 30-year outdated fee to putting us above Saskatchewan. So, we tried to make sure that we were still below everyone else, but just trying to get things up to date,” said Horner.
Population growth challenges both Health and Education
According to Horner, Budget 25/26 marks the highest ever investment by Alberta in both education and health care, but both ministries are under pressure because of the high population growth of the past several years. While population growth is expected to slow down to 2.5 per cent in 2025 it “put pressure on every aspect of the health care system, from emergency rooms and beyond.”
Health will see a $28 billion operating expense, including $644 million for primary care, $4.6 billion for acute care, $1.7 billion for Addiction and Mental Health Services, 3.8 billion for Assisted Living Alberta.
Education will have a $9.9 billion operating budget, including $1.6 billion for students with special learning needs which Horner said will allow schools to add staff and supports to complex classrooms.
Also changing will be the formula used to calculate school funding. Previously, the province used a three-year average of enrollment. This is being changed to a two-year average.
The capital budget includes 2.6 billion over three years for school construction with a goal of 100 new and updated schools over the next seven years.
