BC Corporate Tax Rate: What Your Corporation Pays in 2026

Two corporations in British Columbia can earn the same profit and pay very different amounts of tax. One keeps most of its income inside the small business limit, and the other has crossed a line it may not have noticed, often because of investment income sitting in the company. The BC corporate tax rate is simple on paper, and knowing where that line sits matters more than memorizing the rates themselves.

British Columbia charges corporate income tax at two rates:

• 2% on active business income that qualifies for the small business deduction
• 12% on all other income, including active income above the small business limit

Neither rate has changed in years. The 12% general rate has applied since January 1, 2018, and the 2% small business rate since April 1, 2017. BC Budget 2026 left both where they were.

Federal tax is charged on the same income, at a net 9% for income eligible for the small business deduction and 15% for everything else. Put together:

So the corporate tax rate BC business owners usually care about is 11%, as long as the income stays inside the limit.

The 2% rate only applies to the first $500,000 of active business income a Canadian-controlled private corporation (CCPC) earns in a year. BC’s limit matches the federal one at $500,000, and it has been at that level since 2010.

Here is what that difference looks like on two profit levels:

• $400,000 of active business income: all of it falls inside the limit, so the combined tax is about $44,000 (11%).
• $700,000 of active business income: the first $500,000 is taxed at 11% ($55,000) and the remaining $200,000 at 27% ($54,000), for about $109,000 in total.

The limit is shared among associated corporations. If you own more than one company, they split a single $500,000 between them, so opening a second corporation does not create a second limit.

This is the part that catches business owners out. BC’s 2% rate applies to income that is eligible for the federal small business deduction, so anything that reduces the federal deduction reduces the BC rate’s reach as well.

The biggest of these is passive investment income held inside the corporation. Under the federal rules:

• Once a CCPC and its associated corporations earn more than $50,000 of passive investment income in a year, the business limit starts to drop.
• Every $1 of passive income above $50,000 cuts $5 from the limit.
• At $150,000 of passive income, the limit is gone entirely, and all active business income is taxed at the 27% combined rate.

A corporation that has been building up a portfolio from retained earnings can cross that $50,000 line without anyone deciding to. Our guide to passive income and the small business deduction goes through how the reduction is calculated and what can be done about it before the year closes.

BC Budget 2026 did not touch the rates, but it did add a new incentive. The BC manufacturing and processing investment tax credit is a temporary, refundable credit for CCPCs:

• 15% of eligible investment, on up to $2 million of investment
• A maximum credit of $300,000 a year, shared among associated corporations
• Available for investments made after March 31, 2026 and before April 1, 2031

If your corporation manufactures or processes goods in BC and is planning equipment or facility spending, the timing of that spending is worth a conversation before it happens.

BC’s 2% small business rate is the same as Alberta’s, so a small CCPC pays an 11% combined rate in either province. The gap shows up above the limit. Alberta’s general rate is 8%, against BC’s 12%, which puts Alberta’s combined general rate at 23% compared with 27% in BC. Ontario’s general rate is 11.5%.

For the detail on each province, see our guides to the Alberta corporate tax rate and the Ontario corporate tax rate.

BC corporate tax is not filed separately. The CRA collects it for the province, so BC corporations report both federal and provincial tax on a single T2 return.

The T2 is due six months after the end of the corporation’s tax year. When the year ends on the last day of a month, the return is due on the last day of the sixth month after it, so a March 31 year-end has a September 30 filing deadline.

The BC corporate tax rate itself is fixed. What changes the tax bill is how much income qualifies for the lower one, and that comes down to choices made during the year: how retained earnings are invested, how the owner is paid and whether associated corporations are sharing the limit sensibly. Your Modern Accountant prepares corporate returns and plans around the small business limit for incorporated owners across BC, from our Vancouver tax accountant clients to the rest of the province. If you want the T2 handled and the planning done before year-end, our corporate tax filing services cover both.