🧑🔎 B.C. Has Fourth-Highest Top Personal Income Tax Rate in Canada And U.S., Making it Unattractive for Top Talent

Thursday, 26 March 2026 10:28.AM

British Columbia has the fourth-highest top personal income tax (PIT) rate in Canada or the United States, and has high taxes on business and investments, too, making the province uncompetitive with neighbouring provinces and states when it comes to attracting top talent and much-needed business investment, according to a new study published by the Fraser Institute, an independent non-partisan Canadian public policy think-tank.

"B.C.'s high personal income tax rates on entrepreneurs, professionals, and businessowners, and its uncompetitive taxes on business investments, poses a significant policy problem for the province since competitive tax rates help attract skilled workers, entrepreneurs and investment," said Ben Eisen, senior fellow at the Fraser Institute and study co-author.

British Columbia Tax Competitiveness Problem Is Growing Over Time finds that B.C. has a combined top PIT rate (which combines provincial and federal incomes taxes) of 53.5 per cent for top earners--including doctors, entrepreneurs and other skilled professionals.

B.C.'s top combined PIT rate is 16.5 percentage points higher than the top combined PIT rate in neighbouring Washington State and Alaska, and it applies to much lower levels of income. The top PIT rate in Washington State and Alaska applies on incomes over $626,350US, whereas the top combined rate in B.C. applies at $259,829CDN.

The study also finds that taxes on businesses and investment in B.C. are also uncompetitive with neighbouring provinces and states, largely because of the province's inefficient Provincial Sales Tax. For instance, the PST applies to machinery and equipment used by businesses to improve their productivity and competitiveness. As a result, B.C. has the highest effective tax rate on new investment in Canada. The province's tax regime discourages businesses from investing in the very things (like machinery and equipment) that make them and their workers more productive and competitive.

Adding to this is that the U.S. has recently passed federal legislation lowering the tax rate on new business investment, which could make B.C.'s business tax environment even more uncompetitive in the coming years.

"Given the worrying state of the B.C. economy, policymakers should look closely at the province's uncompetitive tax rates on top earners and businesses with an eye to reform," Eisen said.

"Attracting highly skilled workers and entrepreneurs and greater business investment to the province would help spur economic growth, which would benefit British Columbians."

SOURCE: The Fraser Institute

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