Ontario Pushes for Return of Staycation Tax Credit to Boost Local Tourism
Ontario’s hospitality industry is urging the provincial government to bring back a popular pandemic-era incentive: the staycation tax credit. Designed to stimulate domestic travel and support the struggling hotel and tourism sector, the proposed revival would allow Ontarians to claim up to 20% of their lodging expenses, with a suggested cap of $1,000 per person.
Industry leaders, including the Ontario Restaurant, Hotel and Motel Association (ORHMA), argue that reinstating the credit could deliver a much-needed injection into local economies and keep tourism dollars circulating within the province as Canadians increasingly favour travel closer to home.
What Was the Staycation Tax Credit?
Originally launched in 2022, the Ontario Staycation Tax Credit was a temporary measure introduced in response to pandemic-related travel disruptions. It allowed Ontarians to claim 20% of eligible accommodation expenses—up to $1,000 for individuals or $2,000 for families—on their income tax return, effectively putting money back into travellers’ pockets while encouraging exploration of the province.
The program expired at the end of 2022, but it proved popular, with over 1.5 million households reportedly claiming the credit. Tourism operators saw a noticeable uptick in bookings across hotels, resorts, B&Bs, and campgrounds during its active months.
Now, with the hospitality sector still recovering and outbound travel continuing to decline, advocates say the time is right to bring it back.
The Push for Revival
The ORHMA, alongside a growing coalition of hoteliers, tourism boards, and chambers of commerce, is actively lobbying Queen’s Park to reintroduce the tax credit in time for summer 2025.
In a recent statement, ORHMA President Tony Elenis emphasised the urgency:
“With U.S. travel declining and many Ontarians looking for affordable ways to vacation locally, the staycation credit is a proven tool to drive spending, create jobs, and support Ontario businesses in every region.”
The group suggests expanding eligibility to include not only traditional accommodations but also short-term rentals, Indigenous tourism experiences, and bundled travel packages. They argue that this would better reflect modern travel habits and broaden the credit’s impact.
Why Now?
Several trends underline the renewed interest in the staycation tax credit:
- U.S. Travel Is Down
Statistics Canada reports a 40% drop in Canadian leisure travel to the United States this year. Economic uncertainty, exchange rates, and a growing preference for domestic vacations have left many Ontarians looking for alternatives closer to home. - Rising Travel Costs
With inflation affecting everything from gas to groceries, Ontarians are seeking ways to travel affordably. A revived tax credit would act as an incentive for those who might otherwise skip a summer trip altogether. - Tourism Sector Recovery Still Lagging
While visitor numbers are rising, Ontario’s tourism sector—especially its accommodation providers—has not fully rebounded from the effects of COVID-19. Smaller operations in rural and northern areas remain especially vulnerable. A targeted financial incentive could help these businesses regain stability heading into peak travel season.
Potential Economic Impact
According to a 2024 economic impact study commissioned by the ORHMA, reviving the staycation tax credit could generate:
- $950 million in new tourism spending
- Over 6,000 full-time-equivalent jobs
- A return of $3.10 in economic output for every $1 in tax credit issued
Tourism Minister Neil Lumsden has acknowledged receiving industry proposals, though no official commitment has yet been made.
“We’re always looking at smart ways to support Ontario’s world-class tourism destinations,” Lumsden said at a recent event in Niagara. “We’ll continue to work with our partners to evaluate what tools are most effective.”
Industry Reaction
Hospitality businesses across Ontario have been vocal in their support. At the Blue Mountain Resort in Collingwood, Marketing Director Alison Chan says the original tax credit helped boost occupancy during the shoulder seasons.
“We saw guests choosing to stay longer or upgrade their rooms because they knew they’d be getting something back. It really had a psychological benefit beyond the financial one.”
In Kingston, hotel manager Rohan Sidhu noted that regional travellers accounted for 60% of weekend bookings in 2022, compared to just 40% before the tax credit.
“People were more willing to try smaller cities or lesser-known destinations,” he said. “The credit gave them that extra push.”
Public Sentiment and Support
Polls suggest that Ontarians are largely in favour of the program. A March 2025 survey by Nanos Research found:
- 68% of Ontarians support reinstating the credit
- 74% of those aged 30–59 said they would be “somewhat” or “very likely” to plan a trip within Ontario if the credit were revived
- Support was especially strong in Northern Ontario and the Ottawa Valley, where tourism is a major economic driver
Looking Ahead: Will the Province Act?
While there is broad support among tourism stakeholders and the public, the future of the staycation tax credit revival ultimately depends on budgetary priorities. With the province focused on balancing fiscal restraint with economic stimulus, decisions may come down to timing and political will.
Some advocates are urging the government to launch a pilot program for summer and fall 2025, followed by a full review in early 2026. This would allow data collection and economic evaluation without committing to a multi-year scheme upfront.
Others propose a tiered credit, offering higher returns for travel in remote or under-visited areas to encourage broader regional impact.
A Homegrown Opportunity
As Ontarians continue to favour local getaways over international adventures, the staycation tax credit could be a powerful tool to support the province’s hospitality sector, especially as it competes with rising costs and evolving traveller expectations.
For now, hotel owners, tourism operators, and regional advocates are hoping that Queen’s Park hears the call—and acts before summer is in full swing.