2026 B.C. Budget Highlights

On February 17, 2026, the B.C. government released its 2026 provincial budget, projecting a $13.3 billion deficit for the 2026–27 fiscal year. While the fiscal plan continues to prioritize funding for public services, it also introduces several notable tax changes and credit enhancements that will affect individuals and businesses across British Columbia.

Below, we summarize the key personal and business tax measures announced in this year’s budget, along with other changes that may be relevant to taxpayers in the province.

Personal tax measures

Increase to the lowest personal tax rate

For the 2026 taxation year and subsequent years, B.C.’s lowest personal income tax rate will increase from 5.06% to 5.60% on income in the first provincial bracket. The basic personal tax credit rate will also increase to 5.60%. Updated payroll withholding tables are expected to apply beginning July 1, 2026.

Pause on indexation of tax brackets and credits

The budget proposes to pause indexation of personal income tax brackets and most non-refundable tax credits at 2026 levels for the 2027 through 2030 taxation years. Indexation is expected to resume in 2031. Over time, this may result in more income being taxed at higher marginal rates as wages rise.

BC tax reduction credit enhanced

For the 2026 taxation year, the maximum B.C. tax reduction credit will increase from $575 to $690. This enhancement is intended to help offset the increase to the lowest personal tax rate for lower-income individuals.

Volunteer firefighter and search and rescue tax credit

Beginning in 2026, the eligible amount for the volunteer firefighter and search and rescue volunteer tax credit will double from $3,000 to $6,000, increasing the maximum available provincial credit.

Children and youth disability supplement

Effective July 1, 2027, a new children and youth disability supplement will be added to the B.C. Family Benefit for families with children who qualify for the federal disability tax credit. The supplement will be income-tested and may provide up to $6,000 annually per eligible child.

Business tax measures

Temporary manufacturing and processing investment tax credit

Effective April 1, 2026, B.C. will introduce a new temporary refundable investment tax credit for Canadian-controlled private corporations. The credit equals 15% of eligible expenditures on qualifying manufacturing and processing buildings, machinery, and equipment, up to a $2 million expenditure limit. The maximum credit available will be $300,000. Eligible expenditures must be incurred before March 31, 2031.

Enhancements to the SR&ED tax credit

For taxation years beginning on or after December 16, 2024, B.C. will enhance its Scientific Research and Experimental Development (SR&ED) tax credit as follows:

• The refundable expenditure limit will increase from $3 million to $6 million.
• Taxable capital phase-out thresholds will be increased to $15 million and $75 million (from $10 million and $50 million).
• Capital expenditures will again be eligible.
• Eligible Canadian public corporations will be able to claim the refundable credit.
• The sunset date will be removed, making the enhanced credit permanent.

These changes increase the potential refundable benefit for corporations performing qualifying R&D in B.C.

Film and production tax credit filing deadline extension

For Film Incentive BC and Production Services Tax Credits, the deadline to file a tax credit claim will be extended from 18 months to 36 months after the end of the corporation’s taxation year. This change will apply to taxation years beginning on or after February 17, 2026.

Other tax measures

Farmers’ food donation tax credit made permanent

The farmers’ food donation tax credit available to both individual farmers and farming corporations will be made permanent upon royal assent. The credit provides a 25% non-refundable tax credit on the fair market value of eligible agricultural products donated to registered charities.

Speculation and vacancy tax increase

The Speculation and Vacancy Tax (SVT) rate for foreign owners and untaxed worldwide earners will increase from 3% to 4%, effective January 1, 2027. No changes apply to 2026 declarations.

Property Tax Deferment

For the 2026 and subsequent taxation years, the property tax deferment program interest rate is increased to rate of prime plus two per cent compounded monthly.

Indirect tax changes

Expansion of PST to additional services

The budget proposes to expand the application of Provincial Sales Tax (PST) to certain additional professional services, such as accounting and bookkeeping services, architectural, engineering and geoscience services, rental property and strata management services, commissions on non‑residential real estate transactions, and security and private investigation services, effective October 1, 2026. Businesses providing affected services should review registration, collection, and compliance requirements ahead of the implementation date.

For a more detailed list of the tax measures and changes announced on February 17, visit the Government of BC website. As additional guidance and legislation are released, further details may clarify how certain measures will be implemented. Contact your DMCL advisor if you have any questions about how these changes might affect you or your business.