Quebec insurance premium tax increase: Impact on employee benefit plans

GroupNews – September 2026

In the Quebec budget adopted in 2025, the Minister of Finance announced that the tax on insurance premiums would be harmonized with the Quebec sales tax (QST) effective January 1, 2027. This measure will increase the cost of certain employer-sponsored employee benefit programs in Quebec.

Impact on employee benefit plans 

Currently, insurance premiums (including group insurance and certain employee benefits) are subject to a 9% tax rate under the Quebec Sales Tax Act. 

Effective January 1, 2027, the rate applicable to group insurance premiums will increase to 9.975%. 

This 0.975% rate increase will result in higher costs for certain employee benefit programs offered to employees in Quebec, such as life, disability, medical and dental insurance. 

For example, for an employer paying an annual group insurance premium of $1 million in Quebec, the tax on insurance premiums will increase from $90,000 to $99,975, representing a $9,975 increase. 

The harmonization of the insurance premium tax (IPT) rate to 9.975% does not change its tax treatment. Although the rate is now the same as that of the QST, the IPT remains a separate tax, and amounts paid as IPT are not eligible for an input tax refund (ITR) . 

Plans and programs currently exempt under the Quebec Sales Tax Act will retain their exemption and will not be affected by this change.

For more information 

If your plans or programs are currently subject to the 9% tax on insurance premiums and you have any questions, please feel free to contact Philippe Laplante, Martin Gascon or any other member of the Eckler team. We would be happy to assist you with this matter.