British Columbia Finance Minister Brenda Bailey presented Budget 2026: Securing B.C.’s Future (“Budget 2026”) on February 17, 2026. Budget 2026 includes a major overhaul of BC’s income tax system. Highlights of these changes and related measures are outlined below.
Income Tax Act
Lowest Personal Income Tax Rate and Basic Personal Income Tax Credits Increased
Effective for the 2026 and subsequent taxation years, the lowest personal income tax rate is increased from 5.06% to 5.60%. This increased rate will apply to the first $50,363 of taxable income for 2026, and will appear on paycheques after July 1, 2026, when payroll withholdings are updated. Effective for the 2026 and subsequent taxation years, the applicable percentage for the basic personal income tax credits is also increased from 5.06% to 5.60%. This will increase the amount of tax credits that can be claimed under the basic personal amount, age amount, and other basic non-refundable income tax credits to fully or partially offset the tax rate increase for taxpayers.
BC Tax Reduction Credit Amount Increased
Effective for the 2026 taxation year, the maximum BC tax reduction credit is increased by $115 to $690. The maximum amount can be claimed by individuals who have a net income of less than $25,570 for 2026. The credit is reduced by 3.56% for income that exceeds the threshold.
Personal Income Tax Brackets and Non-Refundable Tax Credits Indexation Paused for 2027 Through 2030
Effective for the 2027 through to the 2030 taxation years, the personal income tax brackets and non-refundable tax credits are paused at their 2026 income levels. Indexation will return for the 2031 and subsequent taxation years. This change will impact the province’s seven personal income tax bracket amounts, as well as non-refundable personal income tax credit amounts, including the basic personal amount, age amount, and disability amount.
Scientific Research and Experimental Development Tax Credit Amended
The Scientific Research and Experimental Development (“SR&ED”) tax credit is amended as follows to align with recent changes to the federal SR&ED tax incentive program: The expenditure limit for the refundable tax credit is increased from $3 million to $6 million; The taxable capital phase-out thresholds are increased from $10 million and $50 million to $15 million and $75 million; Capital expenditures are now eligible for the tax credit again; and Eligible Canadian public corporations are now able to claim the refundable SR&ED tax credit. These changes are effective for taxation years that begin on or after December 16, 2024. The sunset date for the SR&ED tax credit is also removed.
Tax Credit for Volunteer Firefighters and Search and Rescue Volunteers Increased
Effective for the 2026 and subsequent taxation years, the amount of income an individual can claim for the tax credit for volunteer firefighters and search and rescue volunteers is increased from $3,000 to $6,000. This increases the maximum tax credit that may be claimed from $168 to $336. New Children and Youth Disability Supplement Introduced A new children and youth disability supplement for the BC Family Benefit is introduced for payments beginning July 1, 2027. The new payment will be income-tested and available to families who have children with support needs who meet the eligibility criteria. Families will be eligible for an additional annual amount of up to $6,000 for each eligible dependent. Eligibility will be determined based on entitlement to the federal disability tax credit. The maximum payment amount of $6,000 will be reduced at a rate of 4% for families with income above the $50,000 threshold. The additional payment will be delivered monthly alongside the BC Family Benefit.
Farmers’ Food Donation Tax Credit Made Permanent
Effective on royal assent, the farmers’ food donation tax credit is made permanent by removing its sunset date.
Mining Exploration Tax Credit Eligible Expenditures Confirmed
Subject to legislative amendments to the Income Tax Act (Canada), effective November 4, 2024, the province will amend the BC mining exploration tax credit to clarify that expenses incurred for the purpose of determining the quality of a mineral resource in Canada do not include expenses related to determining the economic viability or engineering feasibility of the mineral resource. This change aligns with the announcement in federal Budget 2025.
Mining Flow-Through Share Tax Credit and Mining Exploration Tax Credit
Effective August 4, 2023, the Income Tax Act is amended to allow the CRA to reduce renounced amounts for the BC mining flow-through share tax credit and the mining exploration tax credit.
Film Incentive BC — Requirement To File a Completion Certificate Eliminated
Effective on royal assent, corporations claiming the Film Incentive BC tax credit are no longer required to file a completion certificate with the CRA that would have been due on or after February 17, 2026. This change relates to the filing of a tax credit claim and does not affect a corporation’s requirement to apply for a completion certificate with the certifying authority.
Production Services Tax Credit Pre-Certification Requirement Eliminated
Effective on royal assent, the requirement for corporations to file a notice of intent to claim the production services tax credit is eliminated for notices due on or after February 17, 2026. Notices that were required to have been filed prior to February 17, 2026, will continue to be subject to the previous requirements and timelines.
Production Services Tax Credit Certification Fee Increased and Major Production Tax Credit Certification Fee Introduced
Effective March 1, 2026, the accreditation certificate fee for the production services tax credit is increased to $19,000 for corporations that began principal photography after December 31, 2024 and apply for certification on or after March 1, 2026. The major production tax credit certificate fee is set at $5,000.
Film Incentive BC and Production Services Tax Credit Filing Deadlines Extended
Effective on royal assent, the time in which a corporation must file a claim for either the Film Incentive BC tax credit or the production services tax credit is extended from 18 months to 36 months after the end of the corporation’s taxation year. The new time limit of 36 months applies to corporations with a taxation year beginning on or after February 17, 2026. For corporations with taxation years beginning before February 17, 2026, the time limit of 18 months is extended by a further 18 months if that time limit would have expired on or after February 17, 2026.
BC Manufacturing and Processing Investment Tax Credit Introduced
Effective April 1, 2026, a new temporary refundable investment tax credit is introduced for investments made by Canadian-controlled private corporations in buildings and machinery and equipment used for manufacturing and processing, subject to exclusions in the legislation. The new investment tax credit is calculated as 15% of eligible investments up to $2 million, for a maximum credit of $300,000. The rate of 15% is available for investments made on or after April 1, 2026 until March 31, 2031. Starting April 1, 2031, the tax credit rate will be reduced by 2.5 percentage points per year until it is fully phased out for investments made after March 31, 2036.
Book Publishing Tax Credit Made Permanent
Effective March 31, 2026, the book publishing tax credit is made permanent by removing its sunset date.
