The B.C. government released the 2026 Budget on February 17, 2026. The Budget pauses personal income tax brackets and non-refundable tax credits indexation, expands the provincial sales tax (PST) to apply to certain professional services, including accounting and bookkeeping services, increases the Speculation and Vacancy Tax Rate for foreign owners, provides certain enhanced limits for Scientific Research and Experimental Development (SR&ED) expenditures, and announces a new temporary 15% refundable tax credit on qualifying manufacturing and processing acquisitions. The Budget also increased B.C.’s lowest personal income tax rate from 5.06% to 5.60% on first $50,363, while increasing certain personal credits, partially or fully offsetting the rate increase for many taxpayers.

The rate change affects the following tax brackets as follows (Combined B.C. and Federal)

Taxable Income	Other Income	Capital Gains	Eligible dividends	Non-eligible dividends
First $50,363	19.60%	9.80%	Nil	9.91%
$50,364 up to $58,523	21.70%	10.85%	Nil	12.32%

Personal Tax Rates (Combined B.C. and Federal) for the highest tax bracket, applicable to taxable income exceeding $265,545, remain unchanged as follows:

Some of the relevant highlights for our clients are noted below:

Corporate Income Tax:

• For taxation years that begin on or after December 16, 2024, the B.C. SR&ED tax credit will be enhanced by: increasing the refundable expenditure limit from $3 million to $6 million, increasing the taxable capital phase out threshold to $15 million and $75 million (from $10 million to $50 million previously), restoring eligibility for capital expenditures, and allowing eligible Canadian public corporations to claim the refundable credit.
• Effective April 1, 2026, the Budget introduces a temporary refundable investment tax credit for investments made by Canadian-controlled private corporations in eligible buildings, machinery and equipment used for manufacturing and processing. The credit is 15 percent of eligible investments up to $2 million, providing a maximum credit of $300,000, and applies to investments made until March 31, 2031. Beginning April 1, 2031, the credit rate will phase out by 2.5 percentage points per year, fully ending for investments made after March 31, 2036.
• For corporations with a taxation year beginning on or after February 17, 2026, the Budget extends the deadline to claim either the Film Incentive B.C. tax credit or the production services tax credit to 36 months (from 18 months) after the end of the corporation’s taxation year. The Budget provides that for corporations with taxation years beginning before February 17, 2026, the 18 months deadline is extended by a further 18 months if that time limit would have expired on or after February 17, 2026.

Personal Income Tax:

• The Budget pauses the indexation of non-refundable tax credits and personal income tax bracket thresholds, effective from 2027 through to the 2030 taxation year. The impact will be more pronounced for higher income individuals, as more of their income may be taxed in higher brackets over time due to inflation.
• Effective for the 2026 and subsequent taxation years, the eligible amount for the volunteer firefighter and search and rescue volunteer tax credit will double from $3,000 to $6,000. As a result, the maximum tax credit is increased from $168 to $336.
• A new children and youth disability supplement to the B.C. Family Benefit will be introduced for payments starting July 1, 2027. Eligible families with children who qualify for the federal disability tax credit may receive up to $6,000 annually per child. The benefit is income‑tested and reduced by four percent for family income above $50,000. The supplement will be paid monthly alongside the B.C. Family Benefit.

Provincial Sales Tax (PST):

• Starting October 1, 2026, the budget expands application of PST to following professional services:
  • Accounting and bookkeeping
  • Architectural
  • Engineering and geoscience
  • Rental property and strata management
  • Commissions and non-residential real estate transactions, and
  • Security and private investigation services.

For architectural, engineering, and geoscience services, PST will apply to 30 percent of the purchase price. Affected businesses will be required to register, collect, and remit PST. The B.C. government will provide more information on this change before the taxes come into effect.

• Starting October 1, 2026, the budget eliminates PST exemptions for certain clothing‑related materials (such as patterns, yarn, natural fibres, thread, and fabric) and for services related to clothing and footwear. Basic laundry services remain exempt. PST exemptions will also be removed for basic cable TV, toll‑free telephone, and residential landline services.
• The budget amends the Provincial Sales Tax Act and Provincial Sales Tax Exemption and Refund Regulation, effective February 18, 2026. These changes enable sellers of goods to provide a point-of-sale exemption or refund within 180 days to businesses purchasing goods for business use outside of the province. The new exemption will allow the purchaser to ship the goods from B.C. instead of requiring the seller to do so.

Other Tax Changes:

• Starting January 1, 2027, the Speculation and Vacancy Tax rate will increase forforeign owners, untaxed worldwide earners, and others, from 3% to 4%.
• The budget adjusts certain tax programs related to B.C. property tax. Specifically, the budget:
  • Changes the terms of property tax deferment loans to more closely align with commercial lending terms
  • Adjusts the homeowner grant by removing enhancements meant to offset carbon tax costs in rural areas
  • Increases the additional school tax rate on residential properties valued over $3 million
  • Increases rural property taxes starting in 2026

Full details of the Budget can be viewed here.

For more information on how any of the proposed changes may impact your business or you, contact your Rise Advisor.

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Rise CPA provides professional accounting, tax and business advice to help you make the right decisions at the right time. Since 1979, we’ve been helping clients create businesses and lifestyles they envision by delivering expert insights and financial guidance. At Rise, we excel at advising business owners and their families in a caring and personal way. Our services cover a wide range of Tax Planning, Auditing, Accounting, Estate Planning, and Business Advisory. Please call (604) 936-4377 or use the online contact form to book an appointment with one of our accounting professionals. 

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