18 Feb 2026 BC Budget: Key Tax Measures for Businesses and Individuals
B.C. Budget: Summary of Tax Measures
February 17, 2026
The Government of British Columbia released its 2026 Budget on February 17, 2026, with several significant tax measures that will affect both individuals and businesses across the province. Below is a clear summary of the most important changes relevant to your tax planning and financial outlook.
Business Income Tax
Scientific Research &Experimental Development (SR&ED) Tax Alignment
The BC SR&ED tax credit will be aligned with recent federal modifications such as a higher expenditure limit of $6 million, lower gradual taxable capital phaseout, and eligible public companies being eligible for the credit. Further the sunset date on this credit will be removed, meaning the credit will not need to be renewed every couple of years.
Manufacturing & Processing (M&P) Investment Tax Credit
Effective April 1, 2026, a temporary refundable investment tax credit (ITC) is introduced for CCPCs purchasing certain buildings and machinery/equipment used in manufacturing and processing. The ITC is calculated as 15% of the eligible investments up to $2 million (maximum credit is $300,000). This ITC starts phasing out in 2031 and fully phased out in 2036.
Personal Income Tax
Tax Rate Increase
The provincial tax rate on the lowest personal income tax bracket (up to $56,363) was raised from 5.06% to 5.60%, effective July 1, 2026.
The BC Tax Reduction Credit has been increased, meaning many lower-income taxpayers could see their net tax burden reduced. But for those in the middle to higher income brackets, this tax increase could result in additional taxation of approximately $300 per year.
Indexation Paused
Income tax brackets and many non-refundable tax credits will be paused at 2026 income levels until 2030, thus increasing personal taxes on individuals in future years depending on CPI growth.
New Children & Youth Disability Supplement
Beginning in July 2027, a new income tested support is available for children with support needs and are eligible for the federal disability tax credit. This monthly-paid supplement is a maximum of $6,000 per year, but is reduced at a rate of 4% for families with incomes above $50,000
Indirect Tax
Provincial Sales Tax (PST) on Professional Services
Effective October 1, 2026, PST will be expanded to include certain professional services previously exempt, such as:
- Accounting and bookkeeping;
- Engineering, architectural, and geosciences (only on 30% of the purchase price);
- Commercial real estate fees, including strata management services and property management; and
- Security and private investigation.
PST Exemptions
Exemptions on services related to clothing and footwear, basic cable television, and landline telephone services are also being removed.
Other
B.C. Speculation and Vacancy Tax Increase
The Speculation and Vacancy Tax rate will rise from 3% to 4%, mainly affecting foreign owners and certain worldwide earners, with modest revenue expected from this increase.
Property Tax Deferral Changes
The interest rate structure for the Property Tax Deferment Program will shift to compound interest on new loans (2026 or later) at prime plus 2%. The terms of loans made prior to 2026 will not be changed.
Disclaimer
This information is general in nature and may not be applicable to all taxpayers. Please contact your Clearline advisor to discuss your specific situation.
If you have any questions about the information outlined above, please reach out to our team at reception@clearlinecpa.ca.
