Prince Edward Island Business Tax Credits, Incentives & Deductions Directory (2025)

Prince Edward Island (PEI) offers a suite of business tax credits, incentives, and deductions to promote entrepreneurship, innovation, economic development, and job growth. Whether you operate a corporation, partnership, startup, manufacturer, agri-business, or digital/media firm, understanding these PEI-specific programs—alongside federal business incentives—can significantly reduce your tax bill and boost your company’s growth. This authoritative directory covers the main PEI business credits by category, with links to in-depth guides for each.

What’s Covered: PEI’s main business tax credits, grants, deductions, and essential eligibility info
Who’s Eligible: PEI-registered corporations, small businesses, manufacturers, agri-businesses, innovation/tech, and more
Quick Links: Directory, Related Topics

For Canada-wide programs, visit: Canada-Wide Business Credits

Modern Charlottetown business district with office buildings and a PEI business team collaborating

PEI Business Tax Credits Directory

PEI Small Business Deduction (SBD) — PEI’s reduced corporate tax rate on the first $500,000 of active business income for Canadian-Controlled Private Corporations (CCPCs). Covers eligibility, phased-out thresholds, claim steps, and how to stack with the federal SBD. Innovation & R&D Tax Credits — Refundable/non-refundable credits for eligible research and development, innovation, and digital media activities. Includes eligibility, rates, application, and stacking with federal SR&ED. Agriculture, Agri-Food & Rural Business Credits — Directory of PEI-specific and federal-provincial partnership programs for primary producers, processors, and rural business investment. Includes grants, capital cost allowance, and cost-share programs. Manufacturing & Processing Investment Credits — Credits for eligible investments in manufacturing, processing, and advanced equipment. Covers capital investment, property tax incentives, and accelerated CCA. Hiring, Training & Apprenticeship Incentives — Wage subsidies, co-op and apprenticeship tax credits, and workforce development grants for PEI employers. Explains claim process and stacking with federal job/training programs. Digital Media, Film & Content Credits — Refundable credits and production incentives for interactive digital media, film/TV, and animation. Stacking rules with federal and Atlantic region programs. Clean Tech, Green Investment & Manufacturing Credits — Details on PEI green/clean tech grants, PST exemptions, and accelerated write-offs for energy and sustainability upgrades. Other PEI Business Credits & Deductions — Directory of additional credits: book publishing, charitable/political donation credits, property tax rebates, export incentives, and more.

Tip: Most PEI business credits require you to file specific provincial schedules (PE428, PE479, etc.) with your T2 corporate tax return. Some programs require pre-approval or direct application. Keep thorough records for all claims and consider consulting a PEI tax professional for complex credits or stacking strategies.

PEI Small Business Deduction (SBD)

Eligibility: Incorporated CCPCs with a permanent establishment in PEI, earning active business income. SBD limit is $500,000, shared among associated corporations.
Tax Rate: PEI offers a reduced small business corporate tax rate (subject to change annually, e.g., 1% for first $500,000 in 2025).
How to Claim: Complete PE428 (PEI Corporate Tax Calculation) with your T2 return. Allocate the SBD if you have associated corporations.
Stacking: Claim the federal SBD together for a very low combined tax rate on your first $500,000 of active business income.

Innovation & R&D Tax Credits

PEI Innovation & R&D Tax Credit: Refundable/non-refundable credit for eligible R&D expenditures performed in PEI. Typically 15%–20% of qualifying salaries, contracts, or expenses. Must meet CRA/federal SR&ED criteria.
Stacking: Can be claimed in addition to federal SR&ED; file both federal T661 and PEI provincial schedules.
Application: File with your T2 corporate tax return; maintain technical project documentation, payroll, and proof R&D was performed in PEI.
Tip: Consider consulting Innovation PEI for grants or additional startup funding for innovation projects.

Agriculture, Agri-Food & Rural Business Credits

PEI Agriculture Grants & Credits: Non-refundable credits and cost-share grants for farm equipment, value-added processing, and certified food safety/environmental practices.
Canadian Agricultural Partnership (CAP): Federal-provincial grants for innovation, risk management, and sustainability. Pre-approval and detailed records often required.
How to Claim: File PE428/PE479 for tax credits; direct application for CAP and grant programs. Keep all receipts and project approvals.

Manufacturing & Processing Investment Credits

Investment Tax Credit: Non-refundable credit for eligible expenditures on new/used manufacturing and processing equipment, buildings, or expansions. Usually 10% of eligible investment (subject to annual limits).
Accelerated CCA: Enhanced depreciation for manufacturing assets matching federal CCA classes.
Property Tax Incentives: Municipalities may offer discounts or rebates for manufacturing expansion or job creation.

Hiring, Training & Apprenticeship Incentives

PEI Employment Development Agency Incentives: Wage subsidies, hiring grants, and co-op/apprenticeship credits for hiring new workers, students, or apprentices. Application required and must be approved before hiring.
Canada Job Grant (PEI stream): Covers up to 66% of training costs for new/existing employees (max $10,000/employee). Apply before starting the training.
Tip: Many PEI and federal hiring incentives can be stacked, but avoid claiming the same wage dollar more than once.

Digital Media, Film & Content Credits

PEI Film and Digital Media Tax Credit: Refundable credit for eligible PEI labour and production costs for film, TV, and interactive digital media. Typically 25%–35% of eligible PEI spend.
Eligibility: Incorporated PEI companies, pre-approval by Innovation PEI, and minimum PEI spending requirements. Keep payroll, residency, and project records for all claims.
Stacking: Can often be combined with federal Canadian Film or Video Production Tax Credit or Interactive Digital Media Credit.

Clean Tech, Green Investment & Manufacturing Credits

PEI Clean Technology Incentives: Provincial/federal grants and tax credits for renewable energy, green upgrades, and sustainable manufacturing/processing. Includes property tax reductions and PST exemptions for qualifying equipment.
Accelerated CCA: Enhanced depreciation for clean energy, green manufacturing, and energy-efficient assets (federal/provincial conformity).
How to Claim: File with T2 and PEI schedules; grants require direct application to Innovation PEI or relevant agency.

Other PEI Business Credits & Deductions

Book Publishing Tax Credit: Refundable credit for eligible PEI-based book publishers on production and marketing costs.
Charitable & Political Donation Credits: PEI corporations can claim a provincial credit for donations to registered PEI charities and political parties, in addition to the federal credit. Receipts must be retained for audit.
Export & International Business Incentives: Grants and credits for PEI businesses expanding into export markets or attending international trade events. Requires pre-application.
Municipal & Sector-Specific Credits: Some towns/cities offer property tax rebates, infrastructure grants, or sector-specific supports for eligible business investments.