Employers offering group benefits plans in Quebec are set to face higher costs starting in 2027, as the province moves to increase the tax applied to certain insurance premiums, according to a press release from Eckler Ltd.
The change stems from the 2025 Quebec budget, in which the Minister of Finance announced that the tax on insurance premiums would be harmonized with the Quebec Sales Tax, effective Jan. 1, 2027.
What’s Changing for Insurance Premiums
Under the current Quebec Sales Tax Act, insurance premiums, including those for group insurance and certain employee benefits, are taxed at a rate of nine per cent. Beginning Jan. 1, 2027, that rate will rise to 9.975 per cent for group insurance premiums, matching the Quebec Sales Tax rate.
Eckler’s release clarified that while the rate is being aligned with the QST, the underlying tax treatment is not changing. The insurance premium tax will remain a distinct tax from the QST, and amounts paid under it will continue to be ineligible for an input tax refund.
Exemptions Remain in Place
Plans and programs that are currently exempt under the Quebec Sales Tax Act will keep their exempt status and will not be affected by the rate increase, according to the release.
The change is expected to increase costs associated with certain employer-sponsored group benefits, including disability, medical and dental insurance, once the new rate takes effect.
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