The Tax Credit Factor Regulations Amendment approved on May 21, 2025, brings changes to the Real Property Tax Act, specifically in relation to the tax credit factors applied to municipalities in the province. These regulations replace the previous schedule outlined in the Real Property Tax Act Tax Credit Factor Regulations (EC802/17) with a new schedule, which includes updated tax credit factors and components for various municipalities.

The primary change introduced by the amendment involves the revocation of the old schedule and the substitution of a new one. Table 1 outlines the tax credit factor components, which are divided into different service categories: street maintenance, police services, development control, and a base category for municipalities. Each service category is broken down into tiers that apply to towns or cities, with different tax credit factors specified for the period from April 1, 2025, to December 31, 2025, and for January 1, 2026, and subsequent years.

For example, in the street maintenance category, the tax credit factor for towns (Tier 1) is set at 0.190 for both the 2025 and subsequent years. For cities (Tier 2), the factor is slightly higher at 0.291 for the same period. Similarly, the police service tax credit factor for contract-based services (Tier 1) is set at 0.078, while the municipal-based service (Tier 2) has a factor of 0.210. Development control services have slightly lower tax credit factors, with a range from 0.024 for planning and development services (Tier 1) to 0.034 for planning, development, and inspection services (Tier 2). The base category has a factor of 0.059 for towns (Tier 1) and 0.097 for cities (Tier 2) in the first period, with slightly increased rates in the subsequent years.

Table 2 lists the tax credit factors for individual municipalities, showing the adjustments in these factors over three periods: January 1, 2024, to March 31, 2025; April 1, 2025, to December 31, 2025; and January 1, 2026, and subsequent years. The municipalities listed in the schedule span a range of urban and rural areas, from larger cities like Charlottetown and Summerside, which have a tax credit factor of 0.592 for the 2024-2025 period, to smaller communities like Union Road and Victoria, which have a much lower factor of 0.012.

For example, the tax credit factor for Charlottetown and Summerside increases from 0.592 in the first period to 0.632 in the second period, and then to 0.650 in 2026 and beyond. Other municipalities, such as Alberton and Cornwall, follow a similar pattern, with tax credit factors rising slightly over time.

These amendments to the Real Property Tax Act aim to establish a clear and updated framework for municipalities to calculate and apply tax credits for the coming years, ensuring that tax credits are distributed in alignment with local service needs and municipal sizes.

Prince Edward Island (431/2025) May 31, 2025
Disclaimer: Insights are for informational purposes only and do not reflect RRI’s official position or constitute legal opinion.