Tax Highlights from the 2025 British Columbia Budget

Highlights from the British Columbia Budget

Minister of Finance Brenda Bailey tabled the 2025 British Columbia provincial budget on March 4, 2025.

The budget projects a deficit of $10.9 billion for the 2025/26 fiscal year, $10.2 billion for 2026/27, and $9.9 billion for 2026/27. The forecast deficit for the nearly completed 2024/25 fiscal year is expected to be $9.1 billion, compared to the initial projected deficit of $7.9 billion.

British Columbia is expected to see modest economic growth in the absence of tariffs, with real GDP growth projected at 1.8% in 2025 and 1.9% in 2026. This comes as immigration slows and trade uncertainty persists, while inflation trends downwards and housing construction remains resilient.

On the income tax front, there are no changes to personal or corporate income tax rates for 2025. However, the budget increases the basic credits for film incentive BC and the production services tax credit, introduces a new 2% major production tax credit, provides a one-time ICBC relief rebate of $110 for eligible policy holders, and raises the speculation and vacancy tax rates.

The following pages summarize the changes announced in the budget. Please note that these changes remain proposals until passed into law by the provincial government.

Personal Tax Matters

Person Income Tax Rates and Tax Brackets

There are no proposed changes to personal income tax rates. However, tax brackets and other amounts have been indexed by 2.8% to account for inflation. The table below outlines British Columbia’s tax rates and brackets for 2025.

The table below outlines the 2025 combined federal and provincial highest marginal tax rates for various types of income.

Climate Action Tax Credit

Budget 2025 ensures that revenue from the carbon tax increase, effective April 1, 2025, is fully allocated to the climate action tax credit. Given lower-than-expected incremental revenue and uncertainty surrounding the future of federal carbon pricing, the climate action tax credit amounts from 2024/25 will be maintained for the 2025/26 benefit year.

Corporate Tax Matters

Corporate Income Tax Rates

There are no proposed changes to corporate income tax rates. The table below outlines British Columbia’s tax rates and the small business limit for 2025.

The table below outlines the 2025 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).

Basic Credits for Film Incentive BC and the Production Services Tax Credit

Budget 2025 enhances incentives for British Columbia's thriving film sector, ensuring that well-paying film and TV industry jobs remain in the province. Film incentive BC credits for Canadian content productions will increase from 35% to 40%, retroactive to January 1, 2025, to further support Canadian content. To attract more international projects to British Columbia, the production services tax credit will increase from 28% to 36%.

Projects claiming the production services tax credit with British Columbia production costs exceeding $200 million may receive additional support through a new 2% major production tax credit.

Regional and Distant Location Tax Credits Amended for Animation Productions

Effective January 1, 2025, the regional and distant location tax credits have been amended to allow animation productions with a brick-and-mortar presence in a regional or distant location to claim the supplemental credits. This change applies to animation productions under either the film incentive BC tax credit or the production services tax credit, provided that principal photography begins on or after January 1, 2025.

Under the new rules, animation productions with a physical office located in a designated regional or distant location may qualify for these supplemental tax credits, provided that at least 50% of the claimed labour expenditures are for workers who are physically present and working in those offices.

Interactive Digital Media Tax Credit

Effective September 1, 2025, the interactive digital media tax credit will increase from 17.5% to 25% for eligible salaries and wages paid in British Columbia on or after that date. Additionally, the program’s sunset date will be removed, making it permanent.

Small Business Venture Capital Tax Credit

Effective for 2025 and subsequent taxation years, the annual credit limit that an individual can claim for investments made on or after March 4, 2025, will increase from $120,000 to $300,000.

Training Tax Credit for Apprentices

The training tax credit for individuals will be extended to three years, through the end of 2028. Effective April 1, 2025, the program will also be amended to ensure that individuals eligible for the enhanced credit—specifically First Nations individuals or persons with a disability—continue to receive it after the federal Apprenticeship Incentive Grant expires on March 31, 2025.

Small Business Venture Capital Program

For the 2025 to 2027 calendar years, the total annual tax credits available under the Small Business Venture Capital Program will be temporarily increased by $15 million to $53.5 million. Of this amount, $10 million per year will be equally allocated among investment streams for new businesses, clean technology, interactive digital media, and businesses located outside of the Metro Vancouver and Capital regional districts. The remaining $5 million per year will be available for investments in any businesses eligible to participate in the program.

Clean Buildings Tax Credit Extended

The deadline for qualifying expenditures for the clean buildings tax credit has been extended by one year to March 31, 2026.

Other Initiatives

ICBC Rebate

To help people and businesses facing high costs, Budget 2025 provides a one-time relief rebate of $110 for eligible policy holders. In total, the rebate is expected to return $410 million to personal and commercial policy holders.

Rental Supports for Low to Moderate Income Families and Seniors

The Rental Assistance Program provides eligible low- to moderate-income working families with financial support for monthly rent payments. To qualify, families must meet a total before-tax household income threshold, have had income at some point in the last year, and have had at least one dependent child. Budget 2025 will increase the income threshold from $40,000 to $60,000 and raise the average supplement families receive by nearly 75%, from approximately $400 per month to $700 per month. These changes are expected to nearly double the number of families receiving support, increasing from around 3,200 to nearly 6,000.

Up to 1,600 additional seniors will benefit from Shelter Aid for Elderly Renters program, as Budget 2025 increases the income threshold from $37,240 to $40,000. The average supplement seniors receive will rise from $261 to $337, a 30% increase.

Exemption for Used Zero-Emission Vehicles Eliminated

Effective May 1, 2025, used zero-emission vehicles will be subject to provincial sales tax. The exemption, originally introduced in Budget 2022, was initially set to expire in 2027 but will now end earlier.

Speculation and Vacancy Tax Rates

Effective January 1, 2026, the tax rate for Canadian citizens and permanent residents who are not untaxed worldwide earners, as well as others currently taxed at 0.5% under the Speculation and Vacancy Tax Act, will increase from 0.5% to 1%.

The rate for foreign owners and untaxed worldwide earners, as well as others specified under the Speculation and Vacancy Tax Act, will increase from 2% to 3%.

The new tax rates will apply to the speculation and vacancy tax payable by property owners based on the use of their residential properties starting in the 2026 calendar year. These changes will not impact taxpayers declaring based on the use of their residential properties in 2025 or earlier.

In conjunction with the tax rate increases, the non-refundable speculation and vacancy tax credit for British Columbia residents will increase from $2,000 to $4,000.

Modern Treaty First Nations’ Property Tax Exemption in Treaty Designated Foreshore Areas

Effective for the 2026 taxation year, lands and improvements in rural areas within a treaty designated foreshore area that are owned or held by a Modern Treaty First Nation or its public institutions will be exempt from property tax.

Eligible First Nations’ Properties Used for Certain Purposes Introduced

Effective for the 2026 taxation year, the province will exempt First Nations’ interest in eligible properties from annual rural property tax. This exemption applies to properties assessed as having no present use or those used for cultural or community purposes. It will align with the new provincial school tax exemption for eligible First Nations’ properties.

BC Family Benefit Amended for Grieving Families

Effective January 1, 2025, the BC Family Benefit will be amended to continue payments for six months following the death of a child. This change aligns with the federal amendment to the Canada Child Benefit.

Various Technical Measures

The budget introduces a number of technical amendments to various enactments including the Income Tax Act, Assessment Authority Act, Provincial Sales Tax Act, and Speculation and Vacancy Tax Act.

We Can Help

Your financial advisor can help you assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact.

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