Provincial tax
British Columbia Business Tax Rates for 2026
British Columbia charges 7% PST beside 5% GST, and its combined small business rate is 11%. The employer health tax starts above $1,000,000 of payroll.
By HBT AccountingSources checked 4 min read
Key points
- 11% combined on the first $500,000 of active business income
- 27% combined general corporate rate
- 5% GST plus 7% PST, filed separately with the province
- Employer health tax once B.C. payroll passes $1,000,000
Corporate tax rates in British Columbia
British Columbia charges 2% on small business income up to $500,000 and 12% on other income. With federal tax that is 11% and 27%. The CRA collects corporate tax for the province, so the British Columbia portion is worked out on the federal T2 rather than on a return of its own.
Above the limit every extra dollar of active business income costs 27% rather than 11%. When a company is close to the line, the timing of a bonus or a large invoice near the year end is worth a conversation before it happens rather than after.
| Rate | British Columbia | With federal tax |
|---|---|---|
| Small business rate | 2% | 11% |
| General rate | 12% | 27% |
| Income the small business rate covers | $500,000 | Same federal limit |
Sales tax in British Columbia
British Columbia is not harmonized today: it had the HST from July 2010 to March 2013 and then returned to separate GST and PST. A business that sells taxable goods or services in the province generally registers for 7% PST with the provincial Ministry of Finance as well as for 5% GST with the CRA, and the two returns are filed separately.
PST has no input tax credit. The PST a business pays on its own equipment and supplies is a cost, while the GST on the same invoice comes back as a credit, so the two belong in different accounts. PST also reaches some services, legal services and software among them, so check before assuming a service is outside it.
British Columbia income tax brackets for 2026
British Columbia has seven brackets, more than any province except Newfoundland and Labrador. The rate climbs from 5.6% to 20.5% on income above $265,545, and with federal tax the combined top rate is 53.5%.
For an owner choosing between salary and dividends, those upper brackets are why the choice is worth modelling again each year rather than set once.
| Taxable income from | Up to | Rate |
|---|---|---|
| $0 | $50,363 | 5.6% |
| $50,363.01 | $100,728 | 7.7% |
| $100,728.01 | $115,648 | 10.5% |
| $115,648.01 | $140,430 | 12.29% |
| $140,430.01 | $190,405 | 14.7% |
| $190,405.01 | $265,545 | 16.8% |
| $265,545.01 | No upper limit | 20.5% |
Payroll costs in British Columbia
The employer health tax starts once B.C. remuneration passes $1,000,000 in a calendar year. Between $1,000,000 and $1,500,000 the tax is 5.85% of the amount over $1,000,000. Above $1,500,000 it is 1.95% of the whole payroll, with no exemption at all.
Associated employers share the one exemption, and an employer that starts or stops having a permanent establishment in British Columbia during the year prorates it. Workplace insurance runs through WorkSafeBC.
Three bodies to keep in step
An employer in British Columbia answers to three bodies: the CRA for corporate tax, GST and payroll deductions; the provincial Ministry of Finance for PST and the employer health tax; and WorkSafeBC for workplace insurance.
Each keeps its own account, its own deadlines and its own penalties. One calendar that holds every date is worth more than three separate sets of reminders.
British Columbia questions, answered
What is the small business tax rate in British Columbia?
11% combined, 2% provincial and 9% federal, on the first $500,000 of active business income.
Do I charge PST and GST on the same invoice in B.C.?
Usually, when the sale is taxable under both. They are shown and filed separately: GST on your CRA return and PST on your provincial return.
When does the B.C. employer health tax start?
Once your B.C. remuneration for the calendar year passes $1,000,000. Below that there is nothing to pay or file.
More for British Columbia businesses
Official sources
- CRA: Corporation tax rates, provincial and territorial table
- CRA: Tax rates and income brackets for 2026
- CRA: GST/HST rates by province
- Government of British Columbia: Employer health tax overview
- Government of British Columbia: Provincial sales tax
- Government of British Columbia: Bulletin PST 106, Legal services
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Important. This article provides general educational information, not legal or tax advice for a specific business. Rules, administrative policies, rates and deadlines can change. Confirm your facts and current obligations with the responsible government agency and a qualified adviser.