VICTORIA: British Columbia’s government raised personal income taxes and widened the provincial sales tax base in its 2026 budget, pairing the measures with a multi year fiscal plan that projects larger deficits and rising debt as spending pressures and borrowing costs build. The budget increases the lowest personal income tax rate to 5.60% from 5.06% for the 2026 tax year, applying to the first C$50,363 of taxable income. The government said it expects payroll withholding tables to be updated so the change appears on paycheques after July 1, 2026.
To offset the increase for lower income filers, the budget raises the maximum B.C. tax reduction credit by C$115 to C$690 for 2026. The government said the average tax change in 2026 is estimated at about C$76 and that more than 40% of taxpayers are expected to see net savings once the credit increase is applied.
The plan also freezes indexation of personal income tax brackets and key non refundable credits at 2026 levels for 2027 through 2030, with indexation resuming in 2031. The budget documents project the bottom bracket rate change will raise C$476 million in 2026 27, while the credit increase will reduce revenue by C$123 million in the same year.
The fiscal plan shows a deficit of C$9.6 billion for 2025 26, followed by projected shortfalls of C$13.3 billion in 2026 27, C$12.2 billion in 2027 28 and C$11.4 billion in 2028 29. Taxpayer supported debt is forecast at C$116.5 billion by March 31, 2026, rising to about C$189.0 billion by 2028 29, with debt to GDP projected to climb over the same period.
Sales tax broadened to services
Starting Oct. 1, 2026, the province plans to apply the 7% provincial sales tax to specified professional services, subject to legislation. The list includes accounting, bookkeeping and assurance services, architectural services, engineering and geoscience services, security and private investigation services, and non residential real estate services such as trading, rental property management and strata management.
For architectural, engineering and geoscience work, the budget materials specify that the tax is intended to apply to 30% of the purchase price, with the remainder not subject to the levy. The province said the measure is part of a broader update to the tax system as it seeks to sustain public services while managing higher costs.
The budget also removes several provincial sales tax exemptions effective Oct. 1, 2026, including exemptions for clothing patterns and certain materials used to make or repair clothing, and for some services related to clothing and footwear, while keeping basic laundry services exempt. It also ends exemptions for basic cable television service, and for residential landline and toll free telephone services.
Revenue totals and timing
Budget tables project the combined tax measures will generate about C$697 million in 2026 27, rising to roughly C$1.26 billion in 2027 28 and about C$1.59 billion in 2028 29. The largest components are the expanded sales tax on professional services and the decision to freeze indexation of personal income tax brackets and selected credits.
The budget sets out the effective dates for each change, with the personal income tax rate increase and credit update applying for the 2026 taxation year and the sales tax changes scheduled for Oct. 1, 2026. The government said the sales tax expansion and exemption removals depend on legislation, while the income tax changes will be reflected through annual filing and updated withholding once implemented. – By Content Syndication Services.