Budget 2026 changed the AI funding landscape for Singapore businesses. If you’re still comparing only PSG and EDG, you’re missing two new options that could save you more money or unlock bigger transformation.
Post-Budget 2026: Why You Need a New Decision Matrix
Before Budget 2026, SMEs choosing AI funding had two paths: PSG for pre-approved tools, or EDG for custom projects. That framework is now incomplete.
What changed:
- EIS AI activity (new): 400% tax deduction on the first S$50,000 of AI spending per Year of Assessment (YA 2027-2028). No pre-approved catalogue required. Works for any qualifying AI expenditure — subscriptions, development costs, implementation fees.
- Champions of AI (new): A programme jointly led by EnterpriseSG and DISG for firms seeking comprehensive AI business transformation with tailored support and access to curated expertise.
- PSG AI (enhanced): PSG is being expanded for digital and AI-enabled solutions, with IMDA increasing the share of pre-approved AI-enabled solutions from 30% to 50%. Pre-approved AI solutions remain the fastest path.
- EDG (unchanged): Still the go-to for custom AI projects with no funding cap.
The old two-option comparison will leave money on the table. Use this updated matrix to evaluate all four paths.
The 4 AI Grant Options at a Glance
| PSG AI | EIS AI | EDG | Champions of AI | |
|---|---|---|---|---|
| Type | Cash grant | Tax deduction | Cash grant | Tailored transformation support |
| Cap | S$30K/year per UEN | S$50K AI spend/YA | No cap | Programme-specific |
| Approval speed | ~6 weeks | No pre-approval | 8-12 weeks | Selection-based |
| Best for | Pre-approved AI tools | Tax-efficient AI spend | Custom AI projects | Enterprise-wide AI transformation |
Decision Tree: Which AI Grant Should You Use?
Start here and follow the flow based on your AI project.
Step 1: Is your AI solution on the PSG pre-approved catalogue?
Can you find your AI tool on the PSG pre-approved list at GoBusiness?
Y
Yes
PSG AI is likely your best option
Pre-approved AI solutions with ~6 week approval, up to 50% funding, S$30K cap. The fastest path to AI adoption.
N
No
Consider EIS, EDG, or Champions of AI
Your AI project isn't on the pre-approved list. The right choice depends on whether you need cash or tax savings, and how ambitious the project is.
Step 2: What kind of AI funding do you need?
EIS AI: 400% Tax Deduction
Tax deduction on AI spending
400% deduction on first S$50K AI spend per YA (YA 2027-2028). No pre-approval list. Need taxable income to benefit.
- AI SaaS subscriptions
- AI development costs
- AI implementation fees
EDG: Enterprise Development Grant
Custom AI project requiring consultancy or development
Up to 50% funding with no cap. Covers consultancy, manpower, and implementation. 8-12 week approval.
- Custom ML model for your data
- AI integration into operations
- AI-powered product development
Champions of AI Programme
Enterprise-wide AI transformation + workforce training
For firms with comprehensive AI ambitions covering enterprise-wide deployment, productivity, innovation, revenue growth, and workforce training.
- Company-wide AI transformation
- AI workforce training programme
- Multi-department AI deployment
Stacking Scenarios: Can You Combine AI Grants?
Yes — for different expenses only. You cannot double-claim the same cost. Here are realistic stacking combinations.
| How It Works | Example | |
|---|---|---|
| PSG + EIS | PSG covers pre-approved AI tool; EIS covers other AI spend not claimed under PSG | PSG: AI chatbot (S$20K, get S$10K back). EIS: AI analytics subscription (S$15K, get 400% deduction) |
| EDG + EIS | EDG covers custom AI project costs; EIS covers separate AI spend not in EDG claim | EDG: Custom ML model (S$100K, get S$50K back). EIS: AI dev tools subscription (S$30K, 400% deduction) |
| PSG + EDG | PSG for off-the-shelf AI tool; EDG for separate custom AI project | PSG: AI-powered CRM (S$25K). EDG: AI process automation project (S$80K) |
Key rule: The same invoice or expense cannot appear in more than one grant claim or tax deduction. Keep separate receipts for each scheme.
Choose PSG AI If…
- Your AI solution is on the PSG pre-approved catalogue
- You want the fastest approval (~6 weeks)
- Your project costs are under S$30K
- You prefer cash reimbursement over tax deductions
- You’re an SME (turnover ≤S$100M or ≤200 employees)
Scheme page: Productivity Solutions Grant (PSG)
Choose EIS AI If…
- Your AI spending is not on the PSG pre-approved list
- You have taxable income (needed to benefit from 400% deduction)
- You want to claim AI SaaS subscriptions, development tools, or implementation costs
- You prefer no prior approval — claim at tax filing time
- Your AI spend is within S$50,000 per YA
Scheme page: Enterprise Innovation Scheme (EIS)
Choose EDG If…
- You need a custom AI solution built for your business
- Your AI project exceeds S$30K (no funding cap with EDG)
- You need consultancy support to design or implement AI
- You want to cover internal manpower costs for AI development
- You’re building AI into core business processes
Scheme page: Enterprise Development Grant (EDG)
Choose Champions of AI If…
- You’re planning enterprise-wide AI transformation across multiple departments
- You need workforce training alongside AI deployment
- Your AI ambition goes beyond a single tool or project
- You have the scale and commitment for comprehensive AI adoption
- You want tailored support and curated expertise rather than only a tool-level grant
Guide: Champions of AI Programme Singapore
Common Mistakes in AI Grant Selection
- Applying for the wrong grant — Using EDG for a solution that’s already on the PSG catalogue wastes 6+ weeks. Always check the PSG list first.
- Not checking the PSG catalogue — The catalogue updates regularly. A solution that wasn’t listed last quarter may be available now.
- Forgetting EIS needs taxable income — The 400% deduction is worthless if your company has no taxable income. Pre-revenue startups should use PSG or EDG instead.
- Starting the project before approval — Signing vendor contracts, making deposits, or beginning AI development before your Letter of Offer means automatic rejection for PSG and EDG.
- Missing stacking opportunities — Many SMEs qualify for PSG + EIS on different expenses. Leaving the EIS deduction unclaimed is free money lost.
- Waiting for Champions of AI when you have a tool-level need — Use PSG, EIS, or EDG for immediate AI adoption. Treat Champions of AI as a deeper transformation programme, not a replacement for every AI purchase.
Related Guides
- Budget 2026 AI & Innovation Grants Overview — all Budget 2026 AI changes at a glance
- Champions of AI Programme Singapore — what we know, how to prepare
- Budget 2026 AI Skills & Free Tools — SkillsFuture AI courses and free premium tools
- Agentic AI Governance Checklist — controls before deploying AI agents
- National AI Missions Singapore 2026 — 4 sectors driving AI transformation
- PSG or EDG for AI? (Pre-Budget) — the original two-option comparison
- Grant Pitfalls Guide — common mistakes to avoid when applying
- Corppass Setup Guide — required for Business Grants Portal access
- Singapore Grants Glossary
Scheme Pages
- Productivity Solutions Grant (PSG)
- Enterprise Innovation Scheme (EIS)
- Enterprise Development Grant (EDG)
Official Links
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