Insurance tax increase

In October 2025, the Quebec government ratified a provision announced in its 2025-2026 budget: the tax rate on insurance premiums in Quebec will increase from 9% to 9.975% as of January 1, 2027. The Quebec government wanted to standardize the tax rate on insurance premiums and that of the Quebec sales tax (QST).

The new tax rate will apply to premiums payable under a group insurance plan, but also to car, home, etc. insurance.

The change in the tax rate will apply to bonuses paid by the employer, but also to those paid by the employee, for all employees domiciled in Quebec. Although the bonus itself will not increase, the tax will; this should therefore generate higher costs for both employees and employers (depending on the bonus-sharing formula, assuming equal bonuses).

This tax adjustment has no impact on the protections, guarantees, rules and conditions of the plans.

Group insurance plan administrators must ensure their payroll system is properly configured to reflect the new tax rate as of January 1, 2027. Note that the new rate will apply to all payments made on or after January 1, 2027.

Employers received an email communication on November 6, 2026, providing further details on the application of this measure specific to their situation and on the modification to be made to their monthly report according to the reporting period.

THE QUEBEC JOINT COMMITTEE FOR THE INSTALLATION OF PETROLEUM EQUIPMENT

You can download the new salary rates following the cost of life increase here.