Quebec adds electric vehicle fees, tax changes

Summary#

This Québec law puts parts of the March 25, 2025 budget into action and updates many other rules. It affects pensions, vehicle fees, data use for research, child support collection, municipal taxes, and more. Most measures start in 2026; new electric‑vehicle fees and luxury‑vehicle changes start in 2027.

Key changes:

• Quebec Pension Plan (QPP): better protects pensions for workers who got reduced income‑replacement benefits after a work injury; costs are billed to the CNESST (workplace safety board).
• Vehicles: raises the “luxury vehicle” threshold from $40,000 to $62,500 and removes special breaks for electric/hybrid vehicles; adds a new annual fee for electric (EV) and plug‑in hybrid (PHEV) vehicles.
• Research data: lets the Institut de la statistique du Québec (ISQ) access and manage more public data for research under tighter rules, with new fees and higher penalties for misuse.
• Child support: adjusts how much income can be seized, eases rules for people on social assistance, and allows temporary changes during a declared emergency.
• Municipal finance: abolishes local business taxes and the rental‑value roll; business improvement district (SDC) member levies remain.
• Other: raises debt‑reduction targets (allows a higher debt ratio), increases the culture philanthropy fund, updates tax administration, and improves how unclaimed life insurance benefits reach families.

What it means for you#

• Workers with work injuries

  • Months when you received reduced income‑replacement benefits before age 65 will not lower your QPP retirement benefit as much.
  • This applies to months after December 2025. The CNESST covers the added pension cost.

• Drivers and car buyers (from Jan 1, 2027)

  • The “luxury vehicle” extra fee will apply only to vehicles priced above $62,500 (up from $40,000).
  • Electric and plug‑in hybrid vehicles lose the old partial exemption and will also pay a new EV/PHEV fee:
    • About $125 per year for EVs; $62.50 per year for PHEVs (different amounts for mopeds, motorcycles, and snowblowers).
  • Expect EV/PHEV fees at initial registration and to keep the right to drive.

• Parents paying or receiving child support

  • The formula for how much of a payer’s income can be seized is updated; support for adult children is excluded from the payer’s “seizable” income.
  • People on social assistance no longer need to post a security (a guarantee) for collection.
  • In a declared emergency, the Finance Minister can set temporary rules on collection fees and on advance payments to families.

• Life insurance beneficiaries

  • Insurers can use death data from Revenu Québec (until 2030) and then from the civil registry to find deceased clients and notify beneficiaries.
  • Unclaimed life insurance is presumed payable 30 days after the insurer learns of the death.
  • Privacy rules apply; there are penalties for misuse. Interest on certain newly presumed amounts is paused until July 12, 2027.

• Researchers and public bodies

  • The ISQ can receive and hold more types of public data (including “data banks”) and share designated data with researchers tied to public bodies, under agreements and safeguards.
  • The minister can set fees for ISQ services to researchers. Fines for violations increase.

• Businesses

  • “Large corporation” status for tax administration now counts the paid‑up capital of linked companies when checking the $10 million threshold.
  • Monetary services firms face daily compounding of certain interest amounts.
  • The government can fund technology to manage First Nations tax exemptions on tobacco, alcohol, and fuel.

• Municipalities and local businesses

  • Local business taxes and the rental‑value roll are abolished. Existing rental‑value rolls that cover 2026 can be used until they end.
  • Cities may shift more to property taxes or SDC member levies to replace lost business‑tax revenue.

• Homeowners and real‑estate users

  • The land register online consultation fee rises from $1.00 to $1.50 per item, with indexation rules starting April 1, 2027.

• New parents and employers (Parental Insurance Plan)

  • In exceptional cases, the government can set contribution rates by regulation, replacing the usual formula for that period.

• Provincial finances

  • Debt‑ratio targets are raised by about 2.5 percentage points at future milestones, allowing a higher net‑debt level than before.

Expenses#

Estimated annual cost: mixed; some measures increase costs, others bring in revenue or shift costs.

• QPP change likely increases pension payouts for affected workers, but CNESST pays these costs (funded by employer premiums).
• New EV/PHEV fees bring in revenue; raising the luxury threshold reduces some “luxury” fee revenue, while removing EV exemptions increases it.
• Ending local business taxes reduces municipal revenues; cities may replace them with property taxes or SDC levies.
• Culture philanthropy fund increases by $1 million per year.
• Land register fee change increases user‑fee revenue.
• ISQ changes may add fee revenue and some administrative costs; higher fines may deter violations.
• Debt‑target adjustment does not by itself cost money but may affect future budgeting.
• No publicly available information.

Proponents’ View#

• Improves fairness in QPP by not penalizing injured workers for months on reduced benefits.
• Modernizes vehicle fees so EV drivers contribute to road costs, while focusing the “luxury” fee on higher‑priced cars.
• Strengthens data‑driven policy and research with clearer rules, better data access, and safeguards.
• Streamlines and strengthens child support collection, with flexibility during emergencies and relief for people on social assistance.
• Simplifies municipal taxation by removing the business tax and its separate roll, reducing red tape.
• Helps families claim life insurance owed to them by letting insurers verify deaths and contact beneficiaries.
• Updates tax rules to better capture large corporate groups and improve administration.

Opponents’ View#

• New EV/PHEV fees and removal of exemptions could discourage electric vehicle adoption and undermine climate goals.
• Raising the luxury‑fee threshold may lower revenue and benefit higher‑income car buyers.
• Ending local business taxes may shift the burden to property owners or residents and reduce municipal flexibility.
• Expanded data sharing by the ISQ and insurers raises privacy concerns, despite safeguards and fines.
• Allowing government to set Parental Insurance contribution rates in “exceptional” cases may reduce predictability for workers and employers.
• Higher land‑register consultation fees increase costs for homeowners, buyers, and small businesses.