British Columbia Budget 2026

BC Budget 2026 estimates the province’s deficit for the 2025-26 fiscal year at $9.614 billion, compared to the $10.912 billion deficit projected in the previous budget. However, the province is projected to see its deficit rise to a record $13.3 billion in 2026–27.

Notably, the budget introduces a new manufacturing and processing investment tax credit, enhancements to the SR&ED credit, an increase to the personal income tax rate for the lowest tax bracket, and applies PST to certain professional services. It also raises the speculation and vacancy tax rate for certain foreign property owners.

Fiscal projections for the next three years are as follows:

Business tax measures

Corporate tax rates

BC Budget 2026 announces no changes to the corporate tax rates or the $500,000 small business limit. 

Combined federal and BC corporate tax rates

BC manufacturing and processing investment tax credit

The budget introduces a temporary refundable manufacturing and processing (M&P) investment tax credit equal to 15% of eligible investments, up to $2 million, for a maximum credit of $300,000. Eligible investments must be made by Canadian‑controlled private corporations in buildings or machinery and equipment used for M&P. Details haven’t yet been released regarding the specific eligibility conditions, nor whether a recapture regime will apply if the asset subsequently ceases to be used for eligible purposes.

The 15% credit will be available to eligible investments made between April 1, 2026 and March 31, 2031. The credit rate will be reduced by 2.5% per year starting April 1, 2031, and fully phased out after March 31, 2036.

BC SR&ED tax credit

BC Budget 2026 amends the BC scientific research and experimental development (SR&ED) tax credit to align with changes proposed in Bill C-15 to the federal program. These changes increase the expenditure limit to $6 million (from $3 million) and restores eligibility of capital expenditures, among other changes. It also removes the expiry date for BC SR&ED, making this a permanent measure.

Film Incentive BC and Production Services Tax Credit

Production Services Tax Credit

The budget eliminates the requirement to file a notice of intent to claim the Production Services Tax Credit for notices due on or after February 17, 2026. 

In addition, the accreditation certificate fee for tax credit increases to $19,000 (from $10,000) for corporations that began principal photography after December 31, 2024 and apply for certification on or after March 1, 2026. 

A fee of $5,000 is introduced for the Major Production Tax Credit certificate.

Film Incentive BC tax credit

The budget eliminates the requirement to file a completion certificate with the CRA to claim the Film Incentive BC tax credit for certificates due on or after February 17, 2026.

Filing deadline extensions

For corporations with taxation years beginning on or after February 17, 2026, the filing deadline to claim for the Production Services Tax Credit and the Film Incentive B.C. tax credit is extended to 36 months (from 18 months) after the corporation’s taxation year end. 

For corporations with taxation years beginning before February 17, 2026 and whose current filing deadline would otherwise have expired on or after February 17, 2026, an 18‑month extension will be added to their existing 18‑month deadline.

Other business tax credit changes

Mining exploration tax credit – The BC mining exploration tax credit excludes expenses related to determining the economic viability or engineering feasibility of mineral resources, to align with proposed federal tax changes.

Farmers’ Food Donation Tax Credit – This temporary measure is made permanent.

Shipbuilding and ship repair industry tax credit – This credit is extended for one year to the end of 2027.

Book publishing tax credit – This temporary measure is made permanent.

Personal tax measures

Personal income tax rates

The BC personal income tax rate that applies to the lowest income tax bracket ($50,363 for 2026) increases to 5.6% (from 5.06%). Similarly, the rate for personal tax credits increases to 5.6%. This increase will apply starting in 2026 and onwards. 

The combined federal and provincial personal tax rates are as follows:

The top combined federal and BC marginal tax rates for 2026 are as follows:

Personal income tax brackets and non-refundable tax credits 

BC Budget 2026 freezes the personal income tax brackets and non-refundable tax credits at their 2026 amounts from 2027 to 2030. Historically, these brackets and credit amounts were indexed to inflation and increased annually. 

BC tax reduction credit 

The maximum BC tax reduction credit increases to $690 (from $575) for 2026 and onwards. The full non-refundable credit is available to taxpayers with net income below $25,570 in 2026, and a partial credit is available for taxpayers with net income below $44,950.

Tax credit for volunteer firefighters and search and rescue volunteers 

The amount of income an individual can claim for the tax credit for volunteer firefighters and search and rescue volunteers is doubled to $6,000 (from $3,000) for 2026 and onwards. This increases the maximum reduction in tax payable to $336 (from $168).

Children and Youth Disability Supplement 

BC Budget 2026 introduces a new BC Children and Youth Disability Supplement for families with children entitled to the federal Disability Tax Credit. The supplement provides up to $6,000 annually for each eligible dependent, paid monthly alongside the BC Family Benefit. The benefit is reduced at a rate of 4% once family income exceeds $50,000 (fully phased out at $200,000). Payments will begin on July 1, 2027.

Sales and excise tax measures

PST on professional services

Additional professional services will be subject to the 7% provincial sales tax (PST), including:

• Accounting and bookkeeping services
• Architectural, engineering and geoscience services (30% of the purchase price of these services are subject to PST)
• Rental property and strata management services and commissions related to buying and selling non-residential real estate
• Security and private investigation services

This measure is effective October 1, 2026. Businesses that provide these services must register to collect and remit PST. This change aligns with other provinces that administer a PST, such as Saskatchewan and Manitoba. 

PST on clothing patterns, basic cable and landline services

BC Budget 2026 proposes to eliminate the following PST exemptions so that the following will be subject to the tax:

• Clothing patterns, yarn, natural fibres, synthetic thread, and fabric that are commonly used in making and repairing clothing
• Services related to clothing and footwear (basic laundry services will remain PST exempt)
• Basic cable television services, toll-free telephone services and residential landline telephone services.

These products and services will be subject to PST effective October 1, 2026.

PST exemption on goods outside of BC

The budget proposes to allow sellers to provide a PST exemption at the time of sale or to provide a refund for certain goods purchased by businesses for use outside BC. The exemption may be available provided the purchaser moves the goods outside of BC and supplies evidence that they are shipped out of the province for business use.

Speculation and vacancy tax

BC Budget 2026 increases the speculation and vacancy tax rate for foreign owners and Canadians who are untaxed worldwide earners, raising the rate to 4% (from 3%) effective January 1, 2027. The higher rate will apply to taxes payable based on the property’s use during the 2027 calendar year and onward.

The budget also introduces a non-refundable $250 penalty for property owners who don’t declare the tax by the March 31 deadline, effective January 1, 2027.

There’s no change to the tax rate for most Canadian citizens and permanent residents subject to the speculation and vacancy tax; their rate remains at 1% for 2026 and subsequent years.

Property transfer tax 

Certain newly constructed purpose-built rental buildings will also be exempt from the property transfer tax, under the purpose‑built rental exemption. Specifically, the exemption is expanding to include newly constructed purpose‑built rental buildings that are leased for up to 24 months before the first taxable transfer is registered at the Land Title Office.

To qualify for the exemption, buildings must be newly constructed, non‑stratified, and operated as rentals—on a monthly basis or longer—for at least 10 years. The residential portion must be used entirely for rental purposes and contain a minimum of four apartments. This measure is retroactively effective as of January 1, 2025, and applies to purchases of qualifying properties until December 31, 2030.

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Visit our Budget 2026 hub to learn more about all federal and provincial budgets.   

^{Disclaimer 
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.}