2026 Provincial Budget Highlights
On February 17, 2026, BC’s Ministry of Finance released the Province’s 2026 Budget. A summary of the key BC Budget highlights is provided below:
Personal Income Tax Measures
Personal income tax measures announced in the Budget include the following:
- Effective for 2026 and subsequent tax years, the lowest personal income tax rate is increased from 5.06% to 5.60%. This rate increase will apply to the first $50,363 of taxable income for 2026 and will be reflected in payroll periods after July 1, 2026.
- Effective for the 2026 tax year, the maximum BC tax reduction credit is increased by $115 to $690 for lower-income individuals.
- Indexation for personal income tax brackets and non-refundable tax credits will be paused for 2027 through to 2030.
- Effective for 2026 and subsequent tax years, the amount of income an individual can claim for the tax credit for volunteer firefighters and search and rescue volunteers is increased from $3,000 to $6,000 which increases the maximum tax credit from $168 to $336.
- A new children and youth disability supplement for the BC Family Benefit is introduced for payments beginning July 1, 2027. Families will be eligible for an additional annual amount of up to $6,000 for each eligible dependent; eligibility will be based on entitlement to the federal disability tax credit. The payment will be reduced at a rate of 4% for families with income above the $50,000 threshold.
Business Income Tax Measures
Business income tax measured announced in the Budget include the following:
- Effective for taxation years beginning on or after December 16, 2024, the Scientific Research and Experimental Development (SR&ED) tax credit is amended to align with the recent changes to the federal SR&ED tax incentive program (2025 Federal Budget Highlights | Smythe LLP).
- Effective April 1, 2026, a temporary refundable investment tax credit (ITC) is introduced for investments made by Canadian-controlled private corporations (CCPC) in buildings and machinery and equipment used in manufacturing and processing, subject to certain exclusions. The ITC is 15% of eligible investments up to $2 million, for a maximum credit of $300,000. This ITC is available for investments made on or after April 1, 2026, until March 31, 2031. The program will begin to phase out starting April 1, 2031, at a rate of 2.5% per year until it is fully phased out for investments made after March 31, 2026.
- Effective on royal assent, the time in which a corporation must file a claim for either the Film Incentive BC tax credit or the production services tax credit is extended from 18 months to 36 months after the end of the applicable tax year. This will apply to corporations with a tax year beginning on or after February 17, 2026. For corporations with tax years beginning before this time, the time limit of 18 months is extended by an additional 18 months if the time limit would have expired on or after February 17, 2026.
- Effective on royal assent, the shipbuilding and ship repair industry tax credit is extended for year to the end of 2027.
- The farmers’ food donation tax credit is made permanent by removing its sunset date.
Sales Tax Measures
Effective October 1, 2026, PST will apply to the following services:
- Accounting and bookkeeping
- Architecture
- Engineering and geoscience
- Rental property and strata management
- Commissions related to buying and selling non-residential real estate
- Security and private investigation
The PST on architectural, engineering, and geoscience services will apply to 30% of the purchase price subject to the tax. More information will be made available before the taxes come into effect.
Also effective October 1, 2026, PST exemptions will be eliminated for the following:
- Clothing patterns, yarn and fabric commonly used in making or repairing clothes
- Services related to clothing and footwear
- Basic cable television services
- Toll-free telephone services and residential landline telephone services
Housing Measures
Effective January 1, 2027, the speculation and vacancy tax rate for foreign owners and untaxed worldwide earners is increased from 3% to 4%. This will apply to the speculation and vacancy tax payable based on the use of residential properties during the 2027 calendar year and onward.
Effective January 1, 2025, newly constructed purpose-built rental buildings leased for a maximum of 24 months before their first taxable transaction is registered at Land Title and Survey Authority of BC will be exempt from property transfer tax. The 24-month period begins on the commencement date of the first lease and leases must have a term of one month or longer.
Purchases of newly constructed, non-stratified purpose-built rentals are exempt from the further 2% property transfer tax, which applies to the fair market value of the residential component of a taxable transaction that exceeds $3 million. Further, transactions occurring between January 1, 2025 and December 31, 2030, are also exempt from the general property transfer tax. To qualify for these exemptions, the residential portion of the property must be entirely used for rental purposes and have at least 4 apartments.