B.C. budget: Here’s which taxes are increasing

Despite across-the-board tax increases and thousands of public sector job cuts, B.C.'s budget is still filled with red ink.

This year’s budget makes some changes to British Columbia’s tax system, raising some rates in a move the province says is necessary to boost revenue and protect core services from cuts.

Income tax

Income tax will increase from 5.06 per cent to 5.60 per cent on the first $50,363 of taxable income, which the finance ministry estimates will cost the average taxpayer an additional $76 per year.

The budget specifies that the “maximum tax impact” will be $201 for people who earn more than $140,000 per year and “do not have additional tax credits available.” This translates to roughly one per cent of taxpayers, according to the budget. These taxpayers are likely to be those who have income from sources other than employment, such as property or investment.

At the same time, B.C. tax reduction credit for lower income earners will increase by $115 which the finance ministry says will translate to net savings for over 40 per cent of taxpayers.

There will be no changes to B.C.’s income tax brackets and non-refundable tax credits between 2027 and 2030.

“This change will impact the province’s seven personal income tax bracket amounts as well as non-refundable personal tax credit amounts, including the basic personal amount, age amount and disability amount,” according to the budget.

“The change will have a greater effect on British Columbians with higher incomes.”

The net new revenue generated from these changes is estimated at $363 million in the 2026/2027 fiscal year.

Provincial Sales Tax

The budget also makes changes to the seven per cent provincial sales tax.

“B.C.’s economy has shifted significantly toward services, which have largely remained untaxed under the PST,” according to the budget.

The services that will be subject to the PST going forward include: accounting and bookkeeping; architectural, geoscientist and engineering services; rental and strata property management; real estate commission; and security and private investigation services.

PST exemptions on services related to clothing and footwear, and on basic cable and residential landline bills will be eliminated. There will also be an exemption for goods used to make or repair clothing—such as patterns, yarn, thread and fabric.

The changes would take effect on Oct. 1, 2026, and are estimated to bring in $284 million in revenue by the end of the fiscal year.

Property taxes

The additional school tax rate for properties with assessed values of between $3 million and $4 million is set to increase from 0.2 per cent to 0.3 per cent. For properties assessed at $4 million or over, the tax will be hiked from 0.4 per cent to 0.6 per cent.

The increase applies to all classes of residential property—including condos and vacant land. The province estimates 2.3 per cent of properties will be subject to the increased tax.

The speculation and vacancy tax is also set to increase, from three per cent to four per cent for 2027.

“Increasing the speculation and vacancy tax rate will help ensure residential properties are used as homes rather than investments,” according to the ministry. A non-refundable late fee of $250 will also be imposed on property owners who do not file their declaration by the deadline.

These changes come into effect Jan. 1, 2027, and are estimated to bring in $97 million by the end of the fiscal year.

There will also be a significant change to the interest rate structure for the property tax deferment program. Rather than simple interest, compound interest will be charged at a rate of prime plus two per cent.

“The province’s borrowing costs have been higher than the program’s lending terms, at a cost to other taxpayers,” according to the budget document.

The budget projects $85.5 billion in revenue and $98.8 billion in spending, sending the deficit ballooning to $13.3 billion.

Full budget coverage:

• B.C. hikes tax rate as budget delivers record $13-billion deficit
• 15,000 public sector jobs to be cut over 3 years
• Projects put on pause as government ‘re-paces’ capital plan
• What the B.C. budget says about U.S. tariffs