Provinces Return to Bracket Creep: B.C.

Geoff Currier

Tax season is back in full force and so is the tabling of provincial budgets. Accountants and bookkeepers as well as other professionals in B.C. beware: your services are about to cost consumers more. And bracket creep is back, too! This month at the Knowledge Bureau we’ll break down each province’s tax changes to help tax and financial advisors inform their clients of the consequences – for residents and those who are moving to the provinces in question – and with deficits growing, the provincial tax news is mostly stark.

The Backdrop. This is the first of our series: British Columbia and the Northwest Territories were first out of the gate this year. On February 5, NT Finance Minister Caroline Wawzonek B.C., while Finance Minister Brenda Bailey tabled her budget on February 17 in B.C.

For B.C. – Higher Taxes in Store. Moving to B.C. in 2026? Your take home pay may be shrinking. Faced with record high deficits, Bailey introduced a series of tax increases and changes and few, if any, will be spared.

Income Tax Increases: British Columbians in the lowest tax bracket (up to $50,363) will see a tax increase of .5% to 5.6% beginning on July 1, 2026. While the tax reduction credit will increase from $575 to $690, it is reduced by 3.56% for income that exceeds $25,570. You’ll have to do the tax math to see how this affects your family.

Then there is the new bracket creep – a way in which governments benefit from inflation. Manitoba’s budget, delivered on March 20th, 2025 by Finance Minister Adrien Sala, reintroduced bracket creep for tax year 2025 forward: indexing of the Basic Personal Amount (BPA) and tax bracket thresholds were frozen and the  BPA remained at $15,780.

Bracket creep is a hidden tax. As incomes rise due to inflation, taxpayers are pushed into higher tax brackets because those brackets have not been indexed to inflation. In other words, while employers have done their part to help offset the inflation with a higher wage, bracket creep diminishes the value of your inflation adjusted wage. In fact, there is no real gain to help you pay for the rising prices of goods and services.

Now, personal income tax brackets and non-refundable tax credits will be frozen in B.C. for 2026 as well, albeit temporarily. They will remain at 2026 levels through 2030. Indexation will not be re-instituted until 2031, meaning an effective tax increase on every wage earner in the province who receives a pay raise for the next four years. This is not technically a tax increase, but it has the same impact on wage earners as a tax hike. 

New Consumption Taxes on Accountants, Communications, Cable TV and Real Estate: Several exemptions from the PST have been removed. On October 1, British Columbians will begin paying PST on basic cable TV, residential landline phones. Want to save money by going back to sewing your own clothes? Unfortunately, you’ll pay more in tax at the checkout: items such as fabric, yarn and patterns used for clothing repair will now be subject to PST. 

If your company provides accounting and bookkeeping services, you will be required to charge PST on those services starting October 1, 2026. Architectural, engineering and geoscientist services will also be subject to the PST as will security and private investigation services.

Bailey has not left out the commercial real estate sector in her search for additional tax revenue. Commercial real estate commissions, along with strata management fees will also be subject to 7% PST come October 1.   

Property Taxes: Some property owners will see increases beginning in 2027. For homes valued at between $3 million and $4 million, there will be an increase from .2% to .3% and for homes valued at over $4 million, the tax will increase from .4% to .6%

The Speculation and Vacancy Tax, designed primarily to discourage foreign ownership, will rise from 3% to 4%.

The $200 Home Owner Grant will be eliminated on January 1, 2027 and the Property Tax Deferment interest rate will be 2% plus prime for the 2026 tax year, compounded monthly. 

A Little Good News: There is some good news for a couple of sectors. The Volunteer Firefighters and Search and Rescue Volunteer tax credit is being doubled from $3,000 to $6,000, to mirror the federal credit. 

The Farmers’ Food Donation Tax Credit, which is a non-refundable tax credit equal to 25% of the fair market donated, will be made permanent.

A new Children and Youth Disability Supplement has been introduced but eligibility is based on entitlement to the Federal Disability Tax Credit. It can result in additional amounts for families of $6,000 for each eligible dependent but the caveat is that it will be reduced by 4% for families with income above $50,000.

Good News for Big Business. Businesses and corporations are facing a number of changes, some of which will be welcomed. For example, a new temporary Manufacturing and Processing Tax Credit of 15% is being introduced for qualifying projects including buildings, machinery and equipment between April 1, 2026 and March 31, 2031.

The Shipbuilding Tax Credit has been extended to the end of 2027 and the Book Publishing Tax Credit has been made permanent. The sunset date for the Scientific Research and Experimental tax credit has also been removed.

The production services tax credit will see some changes. The accreditation certification fee will increase to $19,000 on March 1, 2026. The pre certification requirement is eliminated and filing deadlines have been extended from 18 to 36 months.

The Northwest Territories: The tax news is better if you want to move north. On February 5, Northwest Territories Finance Minister Caroline Wawzonek tabled a budget that saw no new taxes introduced; this despite projections that both personal and corporate tax revenues will decline in the coming year. Some fees and property taxes mill rates are being adjusted for inflation although the mill rate will remain at 2025-26 levels for diamond mines. The most significant increase in Wawzonek’s budget is in the area of the carbon tax, which will increase from $15 per tonne of greenhouse gas emissions to $110 per tonne on April 1 of this year.

Are you a solopreneur in the tax, accounting or financial services industry? Your services will continue to be in high demand as the volume of tax changes brought down by federal and provincial finance minister mount in response to volatile tiles. Knowledge Bureau can help with workplace training for your expanding workforce and business training for you. Consider the following DMA-Specialist programs to help you grow:

• DMA-Tax Services Specialist™
• DMA-Accounting Services Specialist™
• DMA-Corporate Tax Services Specialist™
• DMA-Small Business Services Specialist™

Mark Your Calendar: March 25 for a Virtual CE Summit – a Special Event on Business Coaching Just for you!

This Month Special Tuition Fee Reductions: Act by March 16! Save $100

• DMA – Small Business Management
• CES – March 25
• The T3 Trust Course – the Filing deadline is March 31 – Learn to Prepare T3 Returns