The Nova Scotia government says its 2026–27 budget will save the average family more than $1,400 per year through tax cuts. This sounds like strong support for families struggling with the cost of living.
But averages can hide important differences. Not all families pay the same taxes. Not all families earn the same income. And not all families benefit equally from tax cuts.
To understand the real impact, we analyzed the main provincial tax measures introduced in budget 2025-26 and in budget 2026-27.
We used the Social Policy Simulation Database and Model (SPSD/M, version 34.0) and we looked at how much families paid in 2024 (before all changes started) and how much they are expected to pay in 2026 (see methodological note). We grouped families into ten income groups, from the lowest income families to the highest.
Higher-income families receive much larger tax cuts
Families with higher incomes receive much larger tax reduction than families with lower incomes.
- Families in the lowest income group (household income of $26,000 or less) save only $194 in 2026 compared to 2024.
- Families in the highest income group (household income of $209,000 or more) save $2,234 in 2026 compared to 2024.
This means that the highest-income families receive about 11 times more savings than the lowest-income families.
This pattern is clear across all income groups. See Table 1 for the full details; For those families who would be considered in the middle income group (households between ($61,000-78,000), the fifth decile, the tax cut averages $687.
Understanding Tax Cuts and Revenue Loss
Aside from understanding who benefits from the tax reduction by income level, the second way to think about tax cuts is how much of a cut to revenue does this represent and how much of the total amount of revenue lost goes to whom?
Beginning with the changes in 2025, the total amount of tax reductions included in the 2026-27 budget is $681.2 million (this includes all reductions, all tax credits, and rebates). This amount compounds every year with all tax brackets and some credits being adjusted for inflation on an ongoing basis.
Looking at the main measures, the one per cent cut in HST and the income tax changes, the total is about $500 million in revenue loss, we find:
- The very top 10% receives $114 million, a full 25% or one quarter.
- The bottom decile receives only $9.9 million, or 2.1%.
- Those whose family incomes above $118,000 in this province, received tax cuts that equal $258 million, or nearly 57% of that $465 million.
(See the final two columns in Table 1, total revenue loss (millions) and share of total tax revenue loss.)
Arts, Culture, Heritage, Equity and the Power of Taxation
The opportunity cost is high, in terms of what we could have done with that revenue to better support people, how we could have invested differently, and how we could have avoided the proposed cuts. The total cuts announced in the Nova Scotia budget are just over $300 million this year, increasing to a billion dollars in year three.
In the week since the budget was released, there is a clearer understanding of the impact of those costs. This understanding is thanks to community groups sharing the realities of these cuts in their programming.
The government has suggested that criticisms have overlooked spending increases and that Nova Scotians get to keep more money in their pockets, and that they are better able to spend that money than the government. Rather, what has become abundantly clear is just how much so many non-profit organizations do with so little, and why the $130 million cut from 287 grants, will in turn impact around 7,500 non-profits and community organizations. Many other organizations have effectively been cut, like libraries, many of which have not had budgetary increases in years, making difficult decisions to do less with less.
Decision-Making and Choices
The decision-making around these cuts is not transparent and will have consequences beyond the budget line item. For example, they cut support for free Halifax Transit passes for all junior and high school students, though what the outcome will be is not clear and also depends on Halifax’s budget decisions; revised eligibility will be based on distance from school or/and low-income. With this cut, they are now also imposing additional administrative burden on school admins to determine eligibility, while many families will no longer have access, and others may be stigmatized.
The province has not run out of fiscal room justifying austerity. The problem is how the government chooses to spend and tax. The province has the fiscal capacity to make careful, targeted investments that yield a higher return on investment. The return on investment of a tax cut is a lot less than the return from government spending—because, as we illustrated, higher-income people benefit most and are more likely to save the money rather than spend it locally. In contrast, these grant and program cuts plus those to public sector jobs will have a ripple-out negative effect on our economy and society more broadly. Statistics Canada data estimates that in 2023, Nova Scotia’s arts and culture sector contributed just over $2 billion in GDP and supported 16,000 jobs.
The province had the opportunity to do more to invest to reduce barriers and dismantle systemic, historic, and ongoing inequities. Instead, it cut programs in early learning and childhood development, postsecondary education, health, wellness, and community development for the Mi’kmaq people and African Nova Scotians.
All these budgetary cuts will be felt deeply especially by small communities and the most vulnerable, exacerbating income, gender and racial inequalities that exist, and making things worse and more costly in the long run. Doing little for families struggling to make ends meet, while cutting community support, will only make life worse for the 40,000 children living in poverty.
The very cultural fabric in Nova Scotia has been worn thin for decades and will now be easily torn. There were alternative budgetary choices, tax changes that could have made our system more progressive, while also building a greener, healthy, and more vibrant province.
Methodological note: This analysis is based on Statistics Canada’s Social Policy Simulation Database and Model. The assumptions and calculations underlying the simulation results were prepared by Daniel Cerdas Sandí and the responsibility for the use and interpretation of these data is entirely that of the author. Economic Families are grouped by total family income and divided into ten equal-sized groups. Taxes are measured at the family level. Results show average tax changes per family between 2024 and 2026.
The main tax measures that were modelled equal $465 million. First, the one per cent cut in the provincial portion of the HST; this is projected to reduce provincial revenues by approximately $260.8 million in the 2025-26 fiscal year, $265.5 million in 2026-27, and $272.4 million in 2027-28. Second, were the changes to personal income tax. Starting in 2025, Nova Scotia began to index personal income tax brackets and select non-refundable tax credits to inflation and made changes to remove the progressivity of the $3000 Basic Personal Amount for those with taxable income in excess of $25,000 who will no longer have that portion phased out and those with incomes over $75,000 who now have an additional $3000 tax reduction. These tax cuts will be compounded every year, with the losses, plus the ongoing inflationary adjustment to all tax brackets.
