VANCOUVER, B.C.: The Canadian Taxpayers Federation released its annual New Year’s Tax Changes report today to highlight major tax changes coming in 2026. 

“There’s good news and bad news for B.C. taxpayers,” said Carson Binda, B.C. Director for the CTF. “The federal government cut income taxes, but it’s hiking payroll taxes on workers. The provincial government canceled the consumer carbon tax, but it’s increasing the speculation tax and ending certain PST breaks.” 

Payroll taxes: The federal government is raising the maximum mandatory Canada Pension Plan and Employment Insurance contributions in 2026. These payroll tax increases will cost a worker up to an additional $262 next year.

For workers making $85,000 or more, federal payroll taxes (CPP and EI tax) will cost $5,770 in 2026. Their employers will also be forced to pay $6,219.

Income tax: The federal government cut the lowest income tax rate from 15 to 14 per cent.

This will save the average taxpayer $190 in 2026, according to the Parliamentary Budget Officer.

Carbon taxes: The provincial government cancelled its consumer carbon tax effective April 1, 2025. However, both the provincial and federal governments still charge carbon taxes through the federal industrial carbon tax and a provincial carbon tax embedded in fuel regulations.

B.C.’s remaining provincial carbon tax is included in the Low Carbon Fuel Standard and increases the cost of gasoline by 18 cents per litre — about $12 for a standard minivan fill-up. 

The federal industrial carbon tax will increase to $110 per tonne in 2026. While the government hasn’t provided further details on how much the industrial carbon tax will cost Canadians, 70 per cent of Canadians believe businesses pass on most or some of the cost of the tax to consumers, according to a Leger poll.

Alcohol taxes: Federal alcohol taxes are expected to increase by two per cent on April 1, 2026.

This alcohol tax hike will cost taxpayers about $41 million in 2026-27, according to industry

estimates.

First passed in the 2017 federal budget, the alcohol escalator tax automatically increases excise

taxes on beer, wine and spirits every year without a vote in Parliament. Since being imposed, the alcohol escalator tax has cost taxpayers about $1.6 billion, according to industry estimates.

Speculation and Vacancy tax: The B.C. government is increasing the speculation and vacancy tax from 0.5 to one per cent for Canadian citizens and permanent residents on Jan. 1, 2026. It is also increasing the tax from two to three per cent for foreign owners. 

PST exemption on used zero-emission vehicles: The provincial government scrapped the PST exemption on used ZEVs in May 2025, instead of letting it expire in 2027 as previously scheduled. 

“The government keeps hiking taxes because it’s wasting too much money,” Binda said. “British Columbians need Prime Minister Mark Carney and Premier David Eby to put down their taxpayer credit cards and cut spending to leave more money in taxpayers’ pockets.

B.C. families and businesses are overtaxed and government needs to cut those taxes so families can get ahead and businesses can start attracting investment again.” 

You can read the CTF’s New Year’s Tax Changes report here.