The 2025 federal budget has introduced a major new initiative aimed at improving productivity and driving private investment across Canada. The new Productivity Super Deduction allows businesses to write off 100% of the cost of manufacturing and processing buildings in the first year.

This measure is designed to strengthen economic growth by making it easier and faster for companies to invest in new facilities, equipment, and technology. The government says this incentive will reduce Canada’s marginal effective tax rate to 13.2%, maintaining its status as the lowest in the G7.

What the Productivity Super Deduction Means for Businesses

The Productivity Super Deduction offers a full first-year writeoff on manufacturing or processing buildings acquired after November 4, 2025, and used for production before 2030. Businesses that begin using these facilities between 2030 and 2033 can still benefit from phased-in writeoffs of 75%, 55%, and lower rates over time.

This change gives Canadian manufacturers and processors a strong incentive to modernize and expand their operations. It also brings Canada’s tax environment closer to the U.S. model, where similar deductions have spurred large-scale investments.

As Jamie Golombek of CIBC Private Wealth Management notes, the ability to write off the full cost of a new facility in the first year is “a huge incentive” for businesses, allowing them to recover investment costs quickly and reinvest those savings into future growth.

Enhanced Investment Incentives and Innovation Support

Alongside the new deduction, the government is reinstating the Accelerated Investment Incentive, which offers enhanced first-year writeoffs for a broad range of capital assets, including clean energy technology, zero-emission vehicles, and scientific research equipment.

The budget also enhances the Scientific Research and Experimental Development (SR&ED) program, increasing the expenditure limit to $6 million for Canadian-controlled private corporations. This allows eligible businesses to claim up to $2.1 million in refundable tax credits annually for qualified R&D work.

Combined, these measures aim to accelerate innovation, expand industrial capacity, and build a more competitive business environment nationwide.

What This Means for Windsor-Essex

Here in Windsor-Essex, where manufacturing and advanced technology industries play a major role in our economy, this super deduction could spark new investment and job creation. With local businesses gaining stronger incentives to expand facilities and adopt new technology, the region’s industrial and commercial real estate sectors are well positioned for long-term growth.

At Lalovich Real Estate, we see opportunities like this as signs of a healthy, forward-looking economy that benefits both business owners and the communities they serve.

Join the Conversation

The Productivity Super Deduction is more than a tax measure—it’s an investment in Canada’s future growth.

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