Why is Ontario looking to bring back a popular tax break for vacationers? Niagara MPP Wayne Gates has introduced new legislation to expand the Ontario Staycation Tax Credit, which ended after 2022. The proposal comes as Ontario’s tourism sector faces economic challenges and the impact of U.S. tariffs on travel spending.
Gates brought his plan to Queen’s Park in April 2025 to address what he sees as policy gaps in supporting local tourism. The original tax credit gave Ontario residents a 20% refund on eligible accommodation expenses within the province. Individuals could claim up to $1,000 for a $200 credit, while families could claim up to $2,000 for a $400 credit.
The previous credit covered stays at hotels, motels, resorts, lodges, bed and breakfasts, cottages, and campgrounds in Ontario. To qualify, stays had to be less than a month and for leisure purposes only. Business travel didn’t count. The taxpayer, their spouse, or eligible child had to pay for the accommodation directly, with no reimbursement from others.
Gates’ expansion aims to help local tourism businesses that have seen fewer U.S. visitors due to cross-border tariffs. It would provide financial incentives for Ontarians to explore their own province instead of traveling abroad. The proposal might increase the claim limits or add new categories of eligible expenses.
The expanded credit is expected to boost tourism revenue for local businesses and attractions across Ontario. It would help families offset vacation costs while keeping their travel dollars in the province. The previous credit reportedly increased bookings at hotels and vacation rentals throughout Ontario.
This tax measure is separate from recent federal HST/GST relief that temporarily removes taxes on certain essential goods. That federal program runs from December 2024 to February 2025 and saves Ontarians up to $260 on select items, but doesn’t directly affect tourism expenses. The federal tax breaks, announced by Deputy Prime Minister Freeland, could complement Gates’ provincial proposal by giving families more disposable income for local travel.
The expanded Staycation Tax Credit would help sustain jobs in Ontario’s tourism sector and support seasonal businesses facing economic pressure.
Targeted tax incentives like these can play a key role in stimulating regional tourism and supporting small businesses. As households look for ways to stretch their budgets, local travel becomes a more attractive option. Learn how economic policies are shaping tourism and spending habits across the region on Marketplace Niagara.
