Budget 2025: What It Means for Small Business

Sector Impact Summary

Budget 2025 does not contain a dedicated small business package, but the sector is affected by almost every fiscal and economic measure in the document. Alberta's small businesses face a challenging operating environment defined by U.S. tariff uncertainty, rising unemployment (forecast at 7.4%), softening consumer demand, and weakening business investment. Against this backdrop, the budget's primary support for small businesses comes indirectly through tax competitiveness, population growth, and workforce development rather than direct spending programs.

The Jobs, Economy and Trade ministry has an operating budget of $2,305 million, but the vast majority ($1,966 million) funds child care, not business programs. Direct business support measures include the $45 million Investment and Growth Fund over three years, $193 million in skills and training programs over three years, and $17 million annually for the Invest Alberta Corporation. The $1,200 million annual income tax cut (new 8% bracket on the first $60,000 of income, saving individuals up to $750) will boost consumer spending, which is the primary revenue source for retail, hospitality, and service-oriented small businesses.

The macroeconomic outlook is the dominant factor for small businesses in this budget. Real GDP growth decelerates from 3.0% to 1.8%, employment growth slows from 3.1% to 1.9%, and the budget explicitly adds $38 million to income support anticipating tariff-driven job losses. The $4 billion contingency is partly designed to buffer economic uncertainty, but small businesses cannot draw on government contingencies; they must absorb the economic impacts directly.

Key Budget Measures

Personal Income Tax Cut

The new 8% tax bracket on the first $60,000 of income will save Albertans approximately $1.2 billion annually, with individual savings of up to $750 per year. This is the budget's single largest indirect support for small business: more disposable income in consumers' pockets translates to stronger demand for local goods and services. Taxpayers earning less than $60,000 see their personal income taxes fall by 20%. The benefit starts appearing in paycheques after July 1, 2025, when payroll withholdings are adjusted.

Tax Competitiveness

Alberta continues to offer the lowest overall tax environment among Canadian provinces: no provincial sales tax, low personal income tax rates (now starting at 8%), low corporate income tax, and low fuel taxes. For small businesses, this translates to lower operating costs, competitive wages, and stronger consumer purchasing power compared to peer provinces.

Investment and Growth Fund

The $45 million Investment and Growth Fund over three years provides capital support for business investment and economic diversification. This is a modest allocation relative to the scale of the small business sector, which employs the majority of Albertans.

Skills and Training Programs

Through Jobs, Economy and Trade, $193 million over three years is allocated for skills and training programs that help workers acquire the capabilities businesses need. This includes workplace training, reskilling for displaced workers, and programs aligned with priority economic sectors.

Alberta is Calling Moving Bonus

An additional $11 million for the Alberta is Calling Moving Bonus program helps attract talent to the province. For small businesses struggling to fill positions in a tight labour market, the program represents a modest but relevant workforce pipeline.

Invest Alberta Corporation

Annual funding of $17 million for the Invest Alberta Corporation supports business attraction and investment promotion. The corporation's work to attract new businesses and investment to Alberta creates supply chain and partnership opportunities for existing small businesses.

Film and Television Tax Credit

The $235 million Film and Television Tax Credit over three years supports creative industry businesses, including the small production companies, post-production studios, and service providers that form the backbone of Alberta's growing film industry.

Red Tape Reduction

The Ministry of Service Alberta and Red Tape Reduction, with an operating budget of $180 million, continues the government's commitment to reducing regulatory burden on businesses. While difficult to quantify, streamlined regulations and simplified processes reduce compliance costs for small businesses.

Funding Changes

Category	2024-25 Forecast	2025-26 Estimate	Change
Jobs, Economy and Trade Operating	$1,937M	$2,305M	+$368M
Alberta at Work initiative	-	-	-$15M
Film and Television Tax Credit	-	-	-$10M

Source: Fiscal Plan 2025-28, Expense, pp. 85-86.

The $368 million operating increase is misleading as a small business indicator: $382 million of the increase is for child care. Business-facing programs within the ministry are essentially flat or declining.

Capital Investment

Direct capital investment relevant to small business is minimal. The Jobs, Economy and Trade capital budget totals just $25 million over three years, primarily for child care IT capital ($10 million) and child care space creation ($8 million). The broader capital plan investments in transportation ($8.5 billion), broadband ($301 million), and municipal infrastructure ($3.4 billion) create indirect benefits through improved connectivity, market access, and community development.

Source: Capital Plan Details by Ministry 2025-28.

Risks

U.S. Tariff Impacts (High). The budget assumes 15% tariffs on all Canadian goods exported to the U.S. except energy products (10%). Alberta exported approximately $32 billion in manufacturing goods to the U.S. in 2024. Small businesses in manufacturing, food processing, forestry products, and cross-border services face significant disruption from higher costs and reduced market access. Canadian retaliatory tariffs on U.S. consumer goods further increase input costs for businesses that source materials from the United States.

Rising Unemployment and Weakening Demand (High). Unemployment rising to 7.4% translates directly to weaker consumer spending. Retail, hospitality, personal services, and food and beverage businesses are particularly exposed to discretionary spending pullbacks. The budget's own projections show employment growth decelerating from 3.1% to 1.9%.

Weakening Business Investment (High). Business investment faces headwinds from rising input costs, heightened uncertainty, and weaker U.S. export demand. Corporate profits are expected to remain below 2024 levels. For small businesses that supply larger firms or depend on investment-driven activity (construction subcontractors, equipment suppliers, professional services), this represents a direct revenue risk.

Labour Market Softening (Medium). While the headline unemployment number is rising, specific sectors continue to face labour shortages, particularly in skilled trades, health care, and technology. Small businesses compete with larger firms and government for available workers, often at a disadvantage on compensation and benefits.

Federal Child Care Agreement Uncertainty (Medium). The Canada-Alberta child care agreement expires in 2025-26. Many child care providers are small businesses, and parents' workforce participation depends on affordable child care. Uncertainty around agreement renewal affects both providers and the broader labour supply.

Opportunities

Tax Competitiveness Advantage. Alberta's unique tax position (no sales tax, low income tax, low corporate tax) gives small businesses a structural advantage in attracting customers, retaining workers, and managing costs. The new 8% bracket strengthens this advantage further.

Population Growth Driving Domestic Demand. Despite slowing to 2.5%, population growth continues to expand the domestic market. New Albertans need housing, food, transportation, health services, professional services, and entertainment, all of which generate small business activity.

Weak Canadian Dollar. The exchange rate forecast of 69.6 US cents per CAD makes Alberta businesses more competitive for exports and tourism. Small businesses in tourism, agriculture value-added products, and manufacturing for export benefit directly.

Trade Diversification. The government's commitment to cultivating new export markets and reducing dependence on U.S. trade creates medium-term opportunities for small businesses that can access Asian, European, or other international markets.

Interest Rate Relief. Bank of Canada rate cuts to 3% ease borrowing costs for small businesses, supporting capital investment, inventory management, and cash flow during a period of economic uncertainty.

What's Missing

Budget 2025 does not include a dedicated small business support package or grant program to help businesses navigate the tariff environment. There is no small business tax credit or reduction in the corporate income tax rate for small enterprises. The Alberta at Work initiative is actually decreasing by $15 million. There is no small business emergency fund or trade disruption assistance program despite the acknowledged tariff risks. Access to capital programs beyond the modest $45 million Investment and Growth Fund and the $13 million Alberta Enterprise Corporation are absent. The budget does not address commercial rent affordability, a growing pressure point for small businesses in Calgary and Edmonton. Digital adoption support for small businesses transitioning to online operations is not specifically funded.

Net Assessment

Small business receives a negative-to-mixed assessment in Budget 2025. The macroeconomic environment is the dominant story: tariff uncertainty, rising unemployment, and weakening business investment create a challenging operating climate that no single budget measure can fully address.

The budget's strongest contributions to small business are indirect: the $1.2 billion income tax cut will support consumer spending, population growth expands the domestic market, and Alberta's tax competitiveness remains a structural advantage. The $193 million in skills training and $45 million Investment and Growth Fund provide some direct support, but these are modest relative to the scale of the sector.

What is missing matters as much as what is present. The absence of a dedicated tariff mitigation program, small business emergency fund, or targeted support measures leaves the sector largely on its own to navigate what the budget itself acknowledges will be a period of significant economic disruption. Small businesses are resilient and adaptive, but Budget 2025 asks them to absorb considerable risk with limited direct government support.