Alberta Budget 2025: Top 10 Highlights

The 10 Most Impactful Measures in Budget 2025

Budget 2025 contains several measures that will reshape Alberta's fiscal landscape and directly affect Albertans, businesses, and public services. Here are the 10 most significant, ranked by impact.

1. Three Consecutive Deficits: $5.2B, $2.4B, $2.0B

The headline number: Alberta returns to deficit for the first time since the pandemic. The province projects deficits of $5,211 million in 2025-26, $2,428 million in 2026-27, and $2,047 million in 2027-28. This represents a dramatic swing from the 2024-25 surplus of $5,760 million — a one-year fiscal reversal of nearly $11 billion (Fiscal Plan, p.17).

The deficit is driven by a $6.6 billion revenue drop (primarily from lower oil royalties and investment income) combined with $4.4 billion in spending growth. The fiscal framework permits this under allowable exceptions for significant revenue declines, with a three-year return-to-balance requirement.

2. New 8% Personal Income Tax Bracket

The government accelerates its promised income tax cut by two years. Effective January 1, 2025, a new 8 per cent tax bracket applies to the first $60,000 of taxable income, down from the current 10 per cent rate. This saves individuals up to $750 annually and reduces personal income taxes by 20 per cent for those earning under $60,000 (Fiscal Plan, p.8).

The estimated cost: $1.2 billion per year in foregone personal income tax revenue. Most taxpayers will see the benefit on their paycheques after July 1, 2025, when payroll withholdings are adjusted.

3. U.S. Tariff Baseline Baked into Budget

For the first time, Alberta builds U.S. tariff impacts directly into its fiscal projections. The budget assumes 15 per cent tariffs on all Canadian goods except energy products, which face a 10 per cent tariff, with Canadian retaliation on consumer goods (Fiscal Plan, p.10).

This assumption shaves approximately 1.2 percentage points off real GDP growth and contributes to the revenue decline. The uncertain nature of trade policy is the primary reason the contingency was doubled.

4. Contingency Doubled to $4 Billion

The contingency allocation jumps from $2 billion to $4 billion — a clear signal of the government's concern about uncertainty. This fund is intended to cover unanticipated spending including tariff implications, compensation pressures from collective bargaining currently underway, disaster response, and emerging priorities (Fiscal Plan, p.11).

The $4 billion contingency represents 5 per cent of total expense, a significant fiscal buffer by historical standards.

5. Health System Refocus: Four New Provincial Agencies

Alberta continues restructuring its $24 billion health system with four integrated provincial health agencies, now all operational or launching:

Recovery Alberta (operational September 2024)
Primary Care Alberta (operational February 2025, budget: $322 million)
Acute Care Alberta (launched February 2025, operating expense: $4,639 million)
Assisted Living Alberta (launching April 1, 2025, operating expense: $3.8 billion)

The refocus aims to reduce administrative complexity, improve care coordination, and create clearer accountability. An Indigenous Advisory Council will advise on culturally safe care delivery (Fiscal Plan, p.9, p.71-73).

6. $26.1 Billion Capital Plan

The three-year Capital Plan increases by $1.1 billion over Budget 2024 to $26,147 million (Capital Plan Details by Ministry). Highlights include:

$8,475M for Transportation and Economic Corridors (highways, bridges)
$3,288M for Education (school construction and SCAP program)
$3,429M for Municipal Affairs (LGFF, water/wastewater)
$1,935M for Seniors, Community and Social Services (housing)
$1,456M for Health (diagnostic imaging, EMS vehicles, equipment)

Specific projects: $2.6 billion for new and ongoing schools, $3.6 billion for health and continuing care facilities, and $7.5 billion for municipal infrastructure (Fiscal Plan, p.12).

7. Education Funding Overhaul: $814M for Enrolment Growth

K-12 education receives $9,883 million in operating expense, a 4.5 per cent increase. The government commits $814 million over three years specifically for enrolment growth, responding to the population surge that added $125 million in unplanned costs in 2024-25 (Fiscal Plan, p.75).

The school funding formula is being restructured to use two years of enrolment data instead of three, making it more responsive to fast-growing school boards. Additional funding: $1.6 billion for specialized learning needs and $55 million for classroom complexity including educational assistants.

8. Affordable Housing: $767M Over Three Years

The Alberta Social Housing Corporation receives significant capital investment: $767 million over three years for the Affordable Housing Strategy, plus ongoing operating programs budgeted at $343 million in 2025-26 (Fiscal Plan, p.80-82).

Programs support over 110,000 Albertans in 60,746 households through affordable housing, rental supplements, and related programs. Capital grants include support for Indigenous housing and $50 million per year for lodges serving lower-income seniors.

9. Compassionate Intervention Act and Mental Health Expansion

The government will introduce the Compassionate Intervention Act in spring 2025, creating a framework for mandated addiction treatment orders for individuals likely to harm themselves or others due to problematic substance use (Fiscal Plan, p.74).

Mental Health and Addiction total expense is $1,792 million in 2025-26. The budget funds 11 new recovery communities to be operational by 2027, expansion of mental health classrooms from 20 to 60, and two new specialized addiction and mental health facilities. Capital grants of $112 million in 2025-26 support recovery community construction.

10. Border Security: New Interdiction Patrol Team

Budget 2025 includes funding for a new Interdiction Patrol Team within Alberta Sheriffs to secure the 298-kilometre Alberta-U.S. border. The team will combat drug smuggling, gun trafficking, illegal border crossings, and other illegal activities with Peace Officers enforcing Criminal Code and provincial statutes (Fiscal Plan, p.82).

Public Safety and Emergency Services operating expense is $1,312 million, up $46 million (3.7 per cent) from 2024-25, with the border security initiative being the primary driver.

Honourable Mentions

Several other measures deserve attention:

AISH funding: $1,641 million, with the new Alberta Disability Assistance Program launching in 2026
Alberta Seniors Benefit: increasing $33 million to $540 million
Skilled trades programs: $135 million per year
Alberta Student Grant: +$5 million, total scholarships $113 million
Alberta Petrochemicals Incentive Program: $311 million over three years
Physician compensation: $6,990 million, with a new primary care compensation model
Fiscal framework amendments: adjusting surplus cash allocation to allow more Heritage Fund contributions

Net Assessment

Budget 2025 is a budget of trade-offs. The government delivers a popular income tax cut while entering deficit territory, doubles the contingency to manage unprecedented uncertainty, and maintains large capital investments despite tightening revenues. The fiscal trajectory is clearly worsening in the near term — the question is whether it proves temporary or structural. The three-year return-to-balance requirement under the fiscal framework will be the critical test.

Evidence basis: All figures sourced from the Fiscal Plan 2025-28, Government Estimates of Supply 2025-26, and Capital Plan Details by Ministry 2025-28, published February 27, 2025.