The 2025 Federal Budget, tabled by Prime Minister Mark Carney on November 4, 2025, introduces significant changes to Canada’s immigration numbers. The accompanying Annex to Budget 2025 outlines the 2026–2028 Immigration Levels Plan, which stabilizes permanent resident admissions and sharply reduces temporary resident inflows.

Permanent Resident Admissions: Stabilized at 380,000 Annually

The plan sets permanent resident (PR) admissions at 380,000 per year from 2026 to 2028, down from 395,000 in 2025. This represents a planning range of 350,000 to 420,000 annually.

• Economic immigration: Increases to 64% of total admissions by 2027 and 2028 (approximately 244,700 per year).
• Family reunification: 81,000 per year in 2027 and 2028.
• Refugees, protected persons, humanitarian, and compassionate grounds: 54,300 per year in 2027 and 2028.
• French-speaking admissions outside Quebec: Rising to 10.5% of total PRs by 2028 (35,175).

Budget 2025 allocates $19.4 million over four years to support the transition of up to 33,000 work permit holders to permanent residency in 2026 and 2027. A separate $120.4 million initiative will recognize eligible protected persons in Canada as permanent residents over the next two years.

Temporary Resident Admissions: Reduced to Under 5% of Population

Temporary resident admissions will decrease from 673,650 in 2025 to 385,000 in 2026 (range: 375,000–395,000), then to 370,000 per year in 2027 and 2028 (range: 360,000–380,000). The government’s objective is to reduce the temporary resident population to less than 5% of Canada’s total population by the end of 2027.

Breakdown of temporary resident targets:

The plan includes provisions for sector-specific flexibility, particularly in agriculture, caregiving, and regions affected by trade disruptions or rural labor needs. Budget 2025 allocates $168.2 million over four years (and $35.7 million ongoing) to implement these reductions, primarily reflecting lower fee revenue from fewer temporary admissions.

Context from the Annex

The government notes that temporary residents grew from 3.3% of the population in 2018 to 7.5% in 2024, contributing to strains on housing, healthcare, and education. Early results of prior restrictions include:

• Asylum claims down by approximately one-third (Our view: they should drop by a lot more)
• New temporary foreign worker arrivals down by approximately 50% in 2025. (Our view: Canadian employers will suffer)
• New international student arrivals down by approximately 60% compared to 2024. (Our view: this is a positive development)

Key Data Summary

Analysis

The 2026–2028 Immigration Levels Plan marks a deliberate pivot from expansion to consolidation. By freezing permanent resident admissions at 380,000 annually—well below recent peaks—and engineering a sharp contraction in temporary inflows, the government is recalibrating the system to align with housing, healthcare, and educational capacity. This is not a temporary pause but a structural reset, with the explicit goal of reducing the temporary resident population to under 5% of Canada’s total by the end of 2027.

For permanent residents, the headline stability masks rising selectivity. The economic class will claim 64% of admissions by 2027, up from prior levels, while family and humanitarian streams contract in relative terms. The 2025 Annual Report to Parliament on Immigration provides the sub-category clarity previously anticipated: approximately 60,000 spots for Federal High-Skilled workers via Express Entry, 55,000 for the Canadian Experience Class, and 115,000 for Provincial Nominee Programs. Family reunification is anchored at 81,000, with 65,000 reserved for spousal sponsorships. Refugee and humanitarian admissions total 54,300, including 25,000 resettled refugees and 20,000 protected persons in Canada. Francophone admissions outside Quebec reach 10.5% (35,175) by 2028, with 70% directed to economic streams and new language incentives.

With no corresponding increase in core processing resources—aside from a modest $19.4 million allocation to transition up to 33,000 existing work permit holders—we anticipate the result will be intensified competition within Express Entry and Provincial Nominee streams. The report tightens eligibility for this transitional pathway: applicants must demonstrate at least 12 months of full-time Canadian work experience in TEER 0–3 occupations, CLB 7 language proficiency, and settlement funds of $13,757 for a single applicant. Historical patterns following similar caps suggest CRS score thresholds will climb and nomination timelines will stretch.

The temporary resident framework is undergoing an even more dramatic overhaul. A drop from over 673,000 planned admissions in 2025 to 385,000 in 2026 represents a near-40% cut in a single year, with further reductions to 370,000 annually thereafter. This is not merely a cap; it is a population management strategy that hinges on both restricted inflows and accelerated outflows via expiring permits. The $168.2 million fiscal provision reflects anticipated revenue loss, underscoring that fewer entrants mean fewer fees.

Within this constrained envelope, international students face the steepest reduction—a 65% decline in new study permits from 2025 levels to just 155,000 in 2026, stabilizing at 150,000 thereafter. The report reserves 50% of post-2026 permits for graduate-level programs in priority fields such as STEM and health. Designated learning institutions, already reeling from earlier caps, will see international tuition streams shrink further, likely forcing program rationalization or increased reliance on domestic enrollment. Post-graduation work opportunities, while preserved in policy, will effectively narrow as fewer students enter the pipeline.

Temporary foreign workers are subject to a parallel contraction, with new work permits falling to 230,000 in 2026 and 220,000 in subsequent years. The government has also signalled a further redesign of the LMIA program, which will be further restricted to particular NOC job title codes. Employers outside priority sectors should anticipate heightened LMIA scrutiny and rising refusal rates.

Two transitional measures offer limited relief. The $19.4 million initiative to convert up to 33,000 work permit holders to permanent status in 2026–2027 targets individuals already embedded in the labor market. A separate $120.4 million program will regularize eligible protected persons, i.e. refugees, with processing prioritized for families. Both are finite, time-bound interventions rather than new permanent pathways. We urge Canada to severely curb its refugee admission program, which is harming the country.

Taken together, labor markets in non-exempt sectors will tighten, post-secondary institutions will face sustained fiscal pressure, and immigration processing backlogs may deepen under heightened vetting—including AI-assisted application reviews, which are filling the Federal Court with judicial review applications, since the AI outputs unreasonable and factually incorrect refusals. The report projects a 10% reduction in backlogs by mid-2026 through $50 million in additional IRCC funding, but this assumes flawless execution amid rising application complexity.

With deep cuts in IRCC processing manpower, the immigration landscape is only going to become more difficult to navigate for those dreaming of immigrating to Canada. While we support the cuts for international students, we fear Canadian companies will suffer with the reduction in their ability to bring skilled foreign workers to close gaps in the Canadian labour market pool, and despite the news stories, we speak to employers who have literally had to shutter their restaurants and stores because they cannot find or keep local hires.

Canadian immigration is about to get a lot tougher.

This analysis is based on the Annex to Budget 2025 and the 2025 Annual Report to Parliament on Immigration (available at: canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/annual-report-parliament-immigration-2025.html). It does not constitute legal advice.