B.C. Income Tax Brackets and Tax Rates 2021

Photo of author

by Enoch Omololu

Updated

Advertiser Disclosure

The personal income tax brackets and tax rates in British Columbia are average compared to more heavily taxed provinces like Manitoba and Quebec.

It is set up as a progressive tax system similar to other jurisdictions in Canada and you pay more in taxes as your taxable income increases.

The lowest tax rate in B.C. in 2021 is 5.06% and it applies to income up to $42,184. On the other end of the spectrum, you pay 20.50% on income over $222,420.

Since you are also required to pay federal taxes, the marginal rates for B.C. paint a different picture. The top combined provincial and federal tax rate on regular income in British Columbia is 53.50%.

For the tax brackets in Ontario, Alberta, and Manitoba, see below:

Tax Rates and Tax Brackets in British Columbia

B.C. Tax Brackets 2021

The income tax brackets and rates in B.C. for the 2020 and 2021 tax years are:

B.C. Tax Bracket 2021Tax Rate 2021B.C. Tax Bracket 2020Tax Rate 2020
Up to $42,1845.06%Up to $41,7255.06%
$42,185 to $84,3697.70%$41,726 to $83,4517.70%
$84,370 to $96,86610.50%$83,452 to $95,81210.50%
$96,867 to $117,62312.29%$95,813 to $116,34412.29%
$117,624 to $159,48314.70%$116,345 to $157,74814.70%
$159,484 to $222,42016.80%$157,749 to $220,00016.80%
$222,421 and over20.5%$220,001 and over20.50%

The way this works is that you pay:

  • 5.06%  on the first $42,184 of taxable income, plus
  • 7.70%  on the next $42,185 (i.e. on the portion of taxable income over $42,184 up to $84,369), plus
  • 10.50% on the next $12,497 (i.e. on the portion of taxable income over  $84,369 up to $96,866), plus
  • 12.29%  on the next $20,757 ( i.e. on the portion of taxable income over $96,866 up to $117,623), plus
  • 14.70%  on the next $41,860 ( i.e. on the portion of taxable income over $117,623 up to $159,483), plus
  • 16.80%  on the next $62,937 (i.e. on the portion of taxable income over $159,483 up to $222,420), plus
  • 20.50% on amounts exceeding $222,420.

These tax brackets were increased in 2021 using B.C.’s Consumer Price Index (CPI) rate of 1.1%. As such, the indexation factor applied was 1.025.

Before applying taxes to your income, a basic personal amount is deducted. For B.C., the basic personal amount for 2021 is $11,070.

In addition to provincial taxes, Canadians pay federal taxes in 2021 as follows:

Federal Taxable IncomeFederal Tax Rate
Up to $49,02015%
Over $49,020 up to $98,04020.50%
Over $98,040 up to $151,97826%
Over $151,978 up to $216,51129%
$216,511 and over33%

The indexation factor applied to federal taxes in 2021 is 1.010 (1%).

Related: Federal and Provincial Benefits for Seniors

B.C. Marginal Tax Rates (Federal and Provincial)

Your marginal tax rate varies depending on the source of your income. For example, you pay a different rate on employment and interest income compared to dividends and capital gains.

The combined federal and provincial taxes you are paying on incremental income in each category are:

Taxable IncomeRegular IncomeCapital GainsIneligible Canadian DividendsEligible Canadian Dividends
Up to $42,18420.06%10.03%10.43%-9.60%
$42,185 to $49,02022.70%11.35%13.47%-5.96%
$49,021 to $84,36928.20%14.10%19.80%1.63%
$84,370 to $96,86631.00%15.50%23.02%5.49%
$96,867 to $98,04032.79%16.40%25.07%7.96%
$98,041 to $117,62338.29%19.15%31.40%15.55%
$117,624 to $151,97840.70%20.35%34.17%18.88%
$151,979 to $159,48344.02%22.01%38.00%23.46%
$159,484 to $216,51146.12%23.06%40.41%26.35%
$216,512 to $222,42049.80%24.90%44.64%31.44%
$222,420 +53.50%26.75%48.89%36.54%

The maximum combined federal and provincial marginal tax rates payable in British Columbia are:

  • Regular income: 53.50%
  • Capital gains: 26.75%
  • Ineligible Canadian dividends:48.89%
  • Eligible Canadian dividends: 36.54%

British Columbia Marginal Tax Rate Example

If you earned $90,000 in taxable salary and interest income, your 2021 taxes are calculated as follows:

  • On the first $42,184 in income, you pay 20.06% i.e. $42,184 × 0.2006 = $8,462.11
  • On the next $6,836 ($49,020 – $42,184), you pay 22.70% i.e. $6,836 × 0.2270 = $1,551.77
  • On the next $35,349 ($84,369 – $49,020), you pay 28.20% i.e. $35,349 × 0.2820 = $9,968.42
  • On the remaining $5,631 ($90,000 – $84,369), you pay 31% i.e. $5,631 × 0.31 = $1,745.61

Your total tax payable in 2021 is $21,727.91.

With a taxable income of $90,000, your marginal tax rate is 31%, and this is the highest rate you pay on an additional dollar of income.

Your average tax rate is lower at 24.14% (calculated as $21,727.91 ÷ $90,000).

We did not deduct other federal and provincial tax credits you may qualify for. After factoring these in, your tax payable and average tax rate will likely be lower.

Related: Minimum Wage in Canada.

B.C. Tax Credits and Deductions

Refundable and non-refundable tax credits can lower your total tax burden.

A non-refundable tax credit reduced the taxes you owe until it reaches $0, while a refundable tax credit reduces the taxes you owe and any excess is paid out as a tax refund.

 Some of the tax credits applicable to B.C. include:

  • Climate Action Tax Credit
  • Political Contribution Personal Income Tax Credit
  • Home Renovation Tax Credit for Seniors and Persons with Disabilities
  • Farmer’s Food Donation Tax Credit
  • Logging Tax Credit
  • Mining Flow-Through Share Income Tax Credit
  • Employee Share Ownership Plan and Employee Ventures Capital Corporation Tax Credits
  • Sales Tax Credit
  • Training Tax Credit
  • Small Business Venture Capital Tax Credit
  • Mining Exploration Tax Credit

You also have basic non-refundable tax credits including the basic personal amount, caregiver credit, pension credit, charitable donations, and more.

Common deductions that lower your taxable income are RRSP contributions, CPP Contributions, and EI contributions.

B.C. Sales Tax

British Columbia charges a 7% Provincial Sales Tax (PST) on top of the 5% Goods and Services Tax (GST) levied by the federal government.

Overall, you are paying a combined 12% sales tax on most purchases.

Some goods attract a higher tax such as Liquor (10%), Vapour products (20%), and Vehicles (7-20%).

How To File Taxes in British Columbia

You are required to file a tax return by April 30 of each year for the previous tax year. If you are self-employed, the CRA gives you an extension until June 15th.

To file your income tax return, you can use:

  • An electronic software: Depending on the software or your taxable income, you may file for free (e.g. TurboTax Free and Simple Tax).
  • A paper income tax and benefit return.  If you filed your taxes using a paper return for the 2019 tax year, CRA will automatically mail you an income tax package in early 2021.
  • File by phone if you are eligible for the File My Return program. Call 1-800-959-8281 to find out if you are eligible.
  • A free tax clinic in your area if you have a modest income and straightforward tax situation.

You can learn about major tax changes for the year here.

Retirement 101 eBook - 3D

Author

Photo of author
Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, Credit Canada, MSN Money, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

2 Shares
Share
Pin
Tweet
WhatsApp
Reddit