Key updates from British Columbia’s 2026 budget

British Columbia budget 2026

On February 17, 2026, British Columbia (B.C.) tabled its 2026 provincial budget, setting out the government’s fiscal outlook and a number of targeted tax measures. While the deficit is projected at $9.6 billion for 2025–26, it is expected to increase to $13.3 billion in 2026–27.  

The budget introduces a range of personal and business tax changes, most of which take effect in 2026 and later years, with implications for individuals, families, and select industries. 

Our experts break down the most relevant proposals here. 

Personal tax measure summary 

Personal income tax changes 

• Lowest personal income tax rate increased - Starting in 2026, the lowest B.C. personal income tax rate will increase from 5.06% to 5.60%, applying to the first $50,363 of taxable income. This change will be reflected in payroll withholdings after July 1, 2026. 

• Indexation paused from 2027 to 2030 - Personal income tax brackets and nonrefundable credits will be frozen at 2026 levels from 2027 through 2030. Indexation is scheduled to resume in 2031.  

Personal tax credit changes 

• B.C. tax reduction credit increased - For 2026, the maximum B.C. tax reduction credit will increase to $690. The credit is available in full to individuals with net income below $25,570, and partially available up to $44,950, helping offset the personal tax rate increase for lower income taxpayers. 

• Basic personal and other nonrefundable credits increased - The value of the basic personal amount and other key nonrefundable credits (such as the age amount) will increase to match the new 5.60% rate. For many taxpayers, this should partially or fully offset the rate increase. 

• Volunteer firefighter and search and rescue credit doubled - The eligible amount for this credit will increase from $3,000 to $6,000, effectively doubling the maximum credit available starting in 2026. 

• New children and youth disability supplement - Beginning July 1, 2027, eligible families may receive up to $6,000 per child per year through a new supplement under the B.C. Family Benefit. The payment is income tested with a phase out starting at family income of $50,000 with full phase out at $200,000. It is also tied to eligibility for the federal disability tax credit.

Business and industry focused measure summary 

Business and industry tax credit changes 

• SR&ED tax credit enhancements - The provincial Scientific Research and Experimental Development (SR&ED) tax credit will be been expanded to align with federal changes. Key updates include higher expenditure limits ($6 million), expanded eligibility for capital expenditures, and refundable credits for eligible public corporations. 

• Manufacturing and processing investment tax credit introduced - A new temporary refundable investment tax credit is available for qualifying investments in buildings and machinery used in manufacturing and processing. The credit is worth 15% of eligible investments, up to a maximum of $300,000, and will be gradually phased out after 2031. 

• Film, production, and creative industry changes - Several measures simplify and extend film and production tax credits, including longer filing deadlines, elimination of certain filing requirements, and updated certification fees. The book publishing tax credit is also made permanent. 

• Agriculture, mining, and shipbuilding measures - The farmers’ food donation tax credit will be made permanent, the mining exploration tax credit is clarified to align with federal rules, and the shipbuilding and ship repair tax credit is extended through 2027. 

Provincial Sales Tax (PST) 

The proposed changes to the PST regime are significant. The following is a summary of these changes but our experts will release more details in the near future. 

• PST will be extended to professional services (effective Oct 1, 2026) 

• Partial PST application (30%) will apply to engineering, architectural, geoscience services 

• There will be a removal of PST exemptions for:  

  • Clothing patterns and materials 

  • Basic cable 

  • Landline services 

Property & housing related taxes

In addition to changes in the Income and Excise Tax Act, the following changes will be implemented under respective property tax legislation. 

• Speculation and Vacancy Tax increases to 4% in 2027 

• Additional school tax rates increased for homes over $3M 

• Changes to property tax deferment interest rates 

• Expansion of property transfer tax exemptions for purpose built rentals 

What this means for you 

These changes are intended to balance revenue needs while providing targeted relief for lower‑income individuals, families, and key industries. The actual impact will vary based on your income level, available tax credits, and whether you or your business qualify for specific incentives. Your Baker Tilly advisor is available to help you navigate these changes.