In October 2025, the Government of Quebec enacted a measure announced in its 2025–2026 budget: the Quebec tax rate on insurance premiums will increase from 9% to 9.975% effective January 1, 2027.

Which types of insurance are affected by this change?

The new tax rate will apply to premiums payable under a group insurance plan, as well as automobile insurance, home insurance, etc.

Why this increase?

The Government of Quebec chose to align the tax rate on insurance premiums with the rate of the Quebec Sales Tax (QST).

What is the impact on a group insurance plan premium?

The tax rate change will apply to premiums paid by the employer as well as those paid by the employee for any employee residing in Quebec. Although the premium itself will not increase, the tax will. As a result, both employees and employers should expect higher costs (depending on the cost-sharing formula, assuming premiums remain unchanged).

Are there any other impacts on a group insurance plan?

No. This tax adjustment has no impact on plan coverages, benefits, rules, or conditions.

As a plan administrator, what should I do?

Administrators of a group insurance plan should ensure that their payroll systems are properly configured to reflect the new tax rate effective January 1, 2027. January 2027 invoices issued by insurers and/or third-party administrators will reflect the new rate. Please note that the new rate will apply to any payment made on or after January 1, 2027.

Next steps

AGA clients using the AGA +PLUS administrative platform have received a communication providing additional details on how this measure will apply to their situation.

The AGA Benefit Solutions team is available to provide support regarding the impact of this change.