BC Budget 2026 Overview

BC Finance Minister Brenda Bailey has warned that this coming provincial budget will make her the least popular person in the province. Budget 2026 presents an updated deficit of $9.6 billion for 2025-26 and projects a $13.3 billion deficet for 2026-27. The BC government’s Budget plans to address its serious deficit by increasing taxes, operating more efficiently, and cutting the province’s public service workforce.

There are almost 600,000 public sector employees across BC, three-quarters of whom are unionized. The Province also plans to address its deficit by adjusting the pace of the capital projects so it can continue building schools, hospitals, and transit in a sustainable way.

The BC Budget has three key terms:

Safeguarding critical services;
Investing in B.C.’s future; and
Updating the tax system while managing government expenses.

Safeguarding Critical Services

Health Care Services
Budget 2026 invests $2.8 billion in new funding for the health-care system over three years, including:

$2.3 billion to increase health system capacity and support a growing need for services, including supporting hiring more doctors, nurses and health-care workers and the planning, development and operation of new and expanded hospitals and health care facilities across the province
$131 million for intensive mental-health and addictions treatment, including increasing spaces for those who need involuntary care

Safer communities
Budget 2026 provides $139 million more over three years to reduce repeat, violent offending and chronic property crime, and support timely access to justice. This includes:

$73 million to continue to improve access to the justice system and support court operations, including sheriff recruitment and retention, Crown counsel, the judiciary, legal aid, and the BC Prosecution Service
$16 million for the new Chronic Property Offending Intervention Initiative that strengthens monitoring and enforcement for crimes such as vandalism and shoplifting that are hurting businesses
$26 million for the Repeat Violent Offending Intervention Initiative, for which, early evaluations show the program is resulting in significantly fewer police interactions and faster charge approvals for high-risk violent offenders
$24 million for the continuation of the Special Investigation and Targeted Enforcement program and the Community Safety and Targeted Enforcement program, both of which provide valuable resources to police to combat repeat violent offending and address street disorder, and to connect individuals to community services

Investing in B.C.’s future

Creating more opportunities for skills training
Budget 2026 opens the door for more British Columbians to be trained for in-demand skilled trades, getting good, family-supporting jobs needed to help B.C. become Canada’s economic engine. A total of $283 million in funding includes:

$241 million to double skilled trades funding over three years
$12 million over three years to enhance the employer training grant, helping double apprenticeship seats by 2028-29
$30 million to train highly qualified professionals by adding specialized streams to existing programs, including engineering, geology, computer science, biology and aerospace

Attracting federal and private-sector investment
A new $400-million British Columbia Strategic Investments Special Account will enable B.C. to quickly take advantage of opportunities to work with the federal government as it invests billions of dollars to defend Canada’s sovereignty, creating jobs and economic opportunities. The special account will help the Province attract investments that leverage B.C.’s strength in sectors such as clean energy, sustainable forestry manufacturing, responsible mining and clean technology. This special account will allow the Province to directly participate in the revenue growth of B.C. businesses through direct investments, equity and loans to support private-sector growth and good jobs for British Columbians.

Streamlining permitting, investing in natural resources
Budget 2026 invests more than $40 million over three years to remove barriers and avoid duplication in permitting across the natural resource and tourism sectors. This funding will build on efficiencies already created, which include:

almost 35% more exploration permits issued in 2025 than in 2024
reducing timelines for major mines applications by 35% since 2019
record-breaking investments of more than $750 million in mining exploration.

Budget 2026 includes a new, temporary 15% Manufacturing and Processing Investment Refundable Tax Credit for businesses investing in buildings, machinery and equipment used in manufacturing and processing. This measure will help businesses become more productive and competitive and help boost B.C.’s manufacturing sector.
Budget 2026 extends the Shipbuilding and Ship Repair Industry Tax Credit until the end of 2027 to continue supporting B.C.’s maritime sector, which is the largest in Canada.
Government is announcing plans to work with industry and the federal government on examining the suitability of adopting a patent box regime in B.C. A patent box regime could provide a reduced tax rate on income made from intellectual property in B.C.

Updating the tax system while managing government expenses

Updating B.C.’s tax system
Increasing the tax rate of the first income tax bracket by less than 0.6 percentage points, from 5.06% to 5.60%. This means an additional $76 in income taxes for the average taxpayer in 2026.

However, more than 40% of taxpayers will see savings when combined with the increase in B.C. tax reduction credit.
B.C. will also pause tax bracket indexing from 2027 until 2030.
Increasing the Speculation and Vacancy Tax rate for foreign owners and untaxed worldwide earners to 4% for the 2027 tax year, up from the current 3%.
B.C. is increasing the Additional School Tax rates from 0.2% to 0.3% for property values between $3 million and $4 million and from 0.4% to 0.6% for property values above $4 million, effective for the 2027 tax year.
Expanding B.C.’s PST tax base to include professional services such as accounting and bookkeeping, architectural, geoscientist and engineering services, commercial real estate fees and security and private investigation services.

This change generally aligns B.C. with how other provinces apply sales taxes to these services.
Removing PST exemptions for some goods and services that were once deemed essential but are not as commonly used anymore, such as clothing repair materials, services related to clothing and footwear, basic cable television and land-line telephone services.

Expanding the tax to these services is generally consistent with how tax applies to these services in most provinces.
Adding a new temporary 15% manufacturing and processing investment refundable tax credit for businesses investing in buildings, machinery and equipment used in manufacturing and processing.
Extending the Shipbuilding and Ship Repair Industry Tax Credit until the end of 2027.
Changing the interest rate structure for the Property Tax Deferment Program from simple to compound and adopting a prime plus 2% rate for new loans.

Strategically sequencing the capital plan
The fiscal plan includes nearly $38 billion in capital projects:

17 major hospitals and acute-care facilities in communities including Vancouver, Surrey, Duncan, Kamloops and Williams Lake
Important transit expansions, such as the Broadway Subway project and Surrey Langley Skytrain
66 major K-12 school additions and improvements in communities including Mission, Prince Rupert and Langley
student housing projects that will add 3,900 new beds in post-secondary facilities in communities like Nanaimo and New Westminster, and the first new medical school in Western Canada in nearly 60 years in Surrey

Making Government More Efficient

Budget 2026 includes an estimated savings of $3.5 billion through expenditure management over the course of the fiscal plan. These will be achieved by continuing the measures taken in 2025-26, as well as through recalibrating program delivery and reviewing funding allocations.
Reduce the size of the public sector by 15,000 full-time-equivalent positions (FTEs) over the three-year fiscal plan, while protecting front-line services and recognizing that some sectors, such as health and education, will continue to need to hire critical front-line positions. The public sector includes organizations outside of core government ministries, such as Crown corporations, school districts, post-secondary institutions and health authorities.
Developing specific targets to reduce the number of executive positions, with a focus on Crown corporations and the health sector. The Province aims to reduce the size of BC Public Service, which is made up of employees working for core government ministries, by 2,500 FTEs by the end of the fiscal plan. These reductions will be achieved largely through attrition and voluntary departures. Additional measures, such as early retirement and voluntary severance incentives, may be used to help support the transition to a smaller, more efficient public service.