To help Albertans with the high cost of living, Budget 2025 delivers on the promised tax cut that will save Albertans hundreds of dollars starting this year. The new eight per cent personal income tax bracket for income up to $60,000 is starting two years ahead of schedule and will save Albertan families up to $1,500 in 2025.

To meet the needs of a population that has grown rapidly in the last few years, Budget 2025 also makes the highest-ever investment in health care and education while moving forward with the Alberta government’s commitment to build schools and classroom spaces faster. The budget continues to support vulnerable Albertans and keep communities and provincial borders safe while supporting the economy, communities and sectors outside the oil and gas industry.

“Budget 2025 is a budget of tough but measured choices that meet the needs of Albertans and maintains our Alberta advantage. It cuts taxes, steadfastly supports public services and solidifies our economic foundation so it can withstand future headwinds.”

Budget 2025 takes a cautious approach in its economic outlook, reflecting the high risk of a Canada-U.S. trade conflict and the potential significant impact on the Alberta economy. The outlook assumes a moderate trade conflict where Canada will face an average 15 per cent tariffs on all goods, while energy products will face a 10 per cent tariff. Alberta will continue to work with federal, provincial and territorial partners to find solutions. Even in light of tariffs, the province expects moderate but continued growth in oil production and investment to keep the province’s economic engine humming. Alberta’s responsible crude oil exports are expected to continue to meet critical U.S energy needs, and the Trans Mountain Pipeline expansion will provide more export capacity for producers.

Investment will continue in existing major projects that are driving activity in industrial building construction, including Dow’s Path2Zero project, Air Products’ new hydrogen facility and Imperial Oil’s Strathcona Refinery renewable diesel expansion project.

Alberta’s housing market is expected to stand out as a bright spot in the economy as homebuilders work to meet the needs of a growing population A slower population growth will help the labour market gradually rebalance over the next few years.

While the province is facing significant economic uncertainty and revenue volatility, the government remains committed to making prudent spending decisions to keep operating expense growth below population growth plus inflation and to sustainably deliver important programs and services to Albertans and Alberta businesses.

Budget 2025 invests:

• $9.9 billion in operating expenses for education, an increase of 4.5 per cent from 2024-25, to help with enrolment pressures, hire more teachers and other educational staff, and support complex classrooms and students.
• $2.6 billion over three years for educational (K-12) infrastructure, an increase of $505 million or 23.9 per cent from Budget 2024. This funding will support the construction of more than 200,000 new and modernized student spaces over the next seven years (almost 90,000 within the next four years).
• $28 billion in operating expense, an increase of $1.4 billion or 5.4 per cent, across the refocused health care system including:
  • $22.1 billion to health care to improve access to quality health services close to home, prioritize patients, build capacity at hospitals and rural facilities, expand surgeries and compensate and retain health professionals.
  • $1.7 billion for implementing the compassionate intervention framework and Recovery Alberta Services.
  • $3.8 billion to focus on making the full continuum of care available to all Albertans, from assisted living, home care and community care, to housing and social supports with wraparound social services.
• $1.3 billion for operating expense for Public Safety and Emergency Services, an increase of 3.7 per cent from 2024-25, to support Alberta Sheriffs, Correctional Services and emergency management in the work to keep Alberta communities safe and secure the southern border.
• $1.6 billion, or a six per cent increase from last year, for Children and Family Services to strengthen the programs vulnerable children and families rely on.
• $6.2 billion, or an 8.8 per cent increase from 2024-25, to support core social programs, including a short-term bump to support more people affected by potential U.S. tariffs and rising grants for housing programs.
• Overall, Budget 2025’s Capital Plan includes $26.1 billion over three years, an increase of 4.4 per cent or $1.1 billion more than Budget 2024, to meet the challenge of growth and build and enhance schools, hospitals, roads and bridges in the province. The plan is projected to support an average of 26,500 direct and 12,000 indirect jobs annually through 2027-28.

The province is also continuing to focus on building the Heritage Fund to $250 billion by 2050. The fund was valued at $25 billion in the third fiscal quarter of 2024-25 and is expected to grow to about $27 billion by the end of the fiscal year. A renewed Heritage Fund that earns money year over year will secure a resilient and prosperous Alberta for generations to come and lessen the province’s reliance on natural resource revenues. An independent board of directors and a new Heritage Fund Opportunities Corporation will unlock access to new opportunities and partnerships with global sovereign wealth funds.

Revenue

• Total revenue in 2025-26 is forecast at $74.1 billion, a decrease of $6.6 billion from the 2024-25 forecast of $80.7 billion. Total revenue is forecast to grow to $77.4 billion in 2026-27 and $80 billion by 2027-28, with broad-based revenue growth led primarily by income taxes.
  • The decrease in 2025-26 comes mainly from a $4.4 billion drop in non-renewable resource revenue, driven by an anticipated decline in oil prices. This revenue source is forecast at $17.1 billion in 2025-26, compared to the $21.5 billion forecast for 2024-25.
  • Revenue from personal income taxes is estimated to decrease to $15.5 billion in 2025-26, down from the $16.1 billion at the third quarter, due to the new eight per cent income tax bracket and negative impacts associated with potential tariffs. Personal income tax revenue is forecast to grow moderately in the following two years as more people continue to move to Alberta.
  • Corporate income tax revenue is estimated at $6.8 billion in 2025-26, down $586 million from the third-quarter forecast for 2024-25, but rising over the next two years.

Expense

• Total expense in 2025-26 is forecast at $79.3 billion, an increase of $4.4 billion or 5.9 per cent from the 2024-25 third quarter forecast.
  • Total expense is expected to be $79.8 billion in 2026-27 and $82 billion in 2027-28, or an increase of about 1.7 per cent per year.
• Operating expense is estimated at $64.3 billion, an increase of $2.2 billion or 3.6 per cent from the 2024-25 third quarter forecast.
  • Operating expense grows to $64.8 billion in 2026-27 and $66.5 billion in 2027-28, an average increase of 1.7 per cent per year.
• A contingency of $4 billion will help to provide government with more flexibility to address unforeseen implications of increased economic uncertainty as well as compensation expense for collective bargaining currently underway.

Deficit

• A deficit of $5.2 billion is forecast for 2025-26.
• The deficit is forecast to drop to $2.4 billion and $2 billion for 2026-27 and 2027-28, respectively.
• The government’s fiscal framework includes allowable exceptions for when the government can run a deficit, including when there is a significant drop in revenue.
• This deficit is largely the result of falling non-renewable resource revenues and increases in costs necessary to provide world-class services to Albertans.

Debt

• Debt servicing costs are forecast to decrease by $231 million in 2025-26 from the 2024-25 forecast, to $3 billion, as funds pre-borrowed in 2024-25 will be used to repay sizeable debt maturities coming due in early 2025-26.

Economic Outlook

• In 2025, real gross domestic product is expected to decelerate to 1.8 per cent, then 1.7 per cent in 2026.
• Population growth is expected to moderate, growing at 2.5 per cent in the 2025 census year, down from the record 4.4 per cent growth in 2024. Growth will shift down to 1.4 per cent over the following two years, then 1.6 per cent in 2028.

Energy and economic assumptions, 2025-26

• West Texas Intermediate oil (USD/bbl)                        $68
• Western Canadian Select @ Hardisty (CND/bbl)        $73.10
• Light-heavy differential (USD/bbl)                                $17.10
• ARP natural gas (CND/GJ)                                          $2.50
• Conventional crude production (000s barrels/day)       519
• Raw bitumen production (000s barrels/day)                 3,558
• Canadian dollar exchange rate (USD¢/CAD$)             69.60
• Interest rate (10-year Canada bonds, per cent)            3.10

Related information

• Budget 2025