What is the BC employer health tax threshold for 2026, and how is the tax calculated?
For 2026, the BC employer health tax threshold is $1,000,000 of BC remuneration: at or below it, no tax. Between $1,000,000 and $1,500,000 the employer pays 5.85% of the excess, and above $1,500,000 it pays 1.95% of all BC remuneration. Associated employers share one $1,000,000 exemption, and charities and non profits get $1,500,000.
What are the 2026 BC EHT thresholds and rates?
For 2026, an employer with BC remuneration of $1,000,000 or less pays no employer health tax. Between $1,000,000.01 and $1,500,000 it pays 5.85% of the amount over $1,000,000, and above $1,500,000 it pays 1.95% of its total BC remuneration, as of October 2026 www2.gov.bc.ca.
| BC remuneration in the year | Regular employer, 2024 to 2026 | Regular employer, 2023 and earlier |
|---|---|---|
| Exemption amount | $1,000,000 | $500,000 |
| Notch rate band | $1,000,000.01 to $1,500,000 | $500,000.01 to $1,500,000 |
| Notch rate | 5.85% of the amount over $1,000,000 | 2.925% of the amount over $500,000 |
| Above $1,500,000 | 1.95% of all BC remuneration | 1.95% of all BC remuneration |
The $1,000,000 structure started with the 2024 return; for 2023 and earlier years the exemption was $500,000 and the notch rate was 2.925% www2.gov.bc.ca. The Employer Health Tax Act, current to October 6, 2026, still writes the figures as $1,000,000 (s. 10), 5.85% up to $1,500,000 (s. 11) and 1.95% (s. 8)
bclaws.gov.bc.ca. The 2026 return and any balance are due March 31, 2027.
How the 5.85% notch works on real payrolls
The notch rate is three times the 1.95% flat rate, so it claws back the exemption over the next $500,000 of payroll. At exactly $1,500,000 the notch tax and the flat tax meet at $29,250, and there is no cliff.
| BC remuneration | Calculation | 2026 EHT | Effective rate |
|---|---|---|---|
| $900,000 | Under the exemption | $0 | 0% |
| $1,050,000 | 5.85% × $50,000 | $2,925 | 0.28% |
| $1,200,000 | 5.85% × $200,000 | $11,700 | 0.975% |
| $1,500,000 | 5.85% × $500,000 | $29,250 | 1.95% |
| $2,000,000 | 1.95% × $2,000,000 | $39,000 | 1.95% |
The $1,050,000 row matters for cash flow. If the previous year's tax exceeded $2,925, the employer pays quarterly instalments on June 15, September 15 and December 15, each the lesser of 25% of last year's tax and 25% of this year's estimate www2.gov.bc.ca. So a 2025 BC payroll above $1,050,000 puts your client on instalments for 2026. Choose the estimate and fall short of 25% of both the actual current and prior year tax, and interest runs on the shortfall.
How do associated employers share the $1,000,000 exemption?
Employers that are associated on December 31 share one exemption. The test borrows the section 256 rules of the Income Tax Act, extended to individuals, partnerships and trusts, with subsections 256(7) to (9) switched off www2.gov.bc.ca. The associated corporations page covers the control tests.
| Combined BC remuneration of the group | Result |
|---|---|
| $1,000,000 or less | No member pays |
| $1,000,000.01 to $1,500,000 | Members split the $1,000,000 in an allocation agreement; each pays 5.85% above its share |
| Over $1,500,000 | No member gets an exemption; each pays 1.95% of its own BC remuneration |
The province's own example: Corporations C ($700,000) and D ($500,000) total $1,200,000, allocate $600,000 and $400,000, and each owes 5.85% × $100,000 = $5,850. Push the group to $1,600,000 and both lose the exemption entirely www2.gov.bc.ca. No member can be allocated more than it would get alone. The agreement isn't filed with the return, but each member keeps a copy and registers, files and pays separately.
Charities and non profits get a bigger exemption per location
A registered charity, or an organization exempt under ITA paragraph 149(1)(e), (g), (i), (j), (k) or (l), has a $1,500,000 exemption. Between $1,500,000 and $4,500,000 it pays 2.925% of the excess, and above $4,500,000 it pays 1.95% of everything www2.gov.bc.ca. Entities in the government reporting entity and municipalities and Crown corporations under 149(1)(c) to (d.6) don't qualify.
Each qualifying location can take its own exemption. A location qualifies when it is part of the BC permanent establishment and the employer alone has the exclusive right to occupy and use it; branches in one building or on contiguous properties count as one. Remuneration at a location that doesn't qualify is allocated to one that does www2.gov.bc.ca.
Two traps. First, a charity with three locations paying $1,000,000 each owes nothing, yet its combined $3,000,000 exceeds $1,500,000, so it must still register and file. Second, charities sit outside the association rules: a business associated with a charity keeps its full exemption and does not share it with the charity www2.gov.bc.ca.
What counts toward the threshold as BC remuneration?
BC remuneration is all pay to employees who report for work at a BC permanent establishment, plus pay to employees who report to no establishment but are paid from or through a BC one. Where the employee lives is irrelevant. Pay to employees who report to an establishment outside BC for all or substantially all of the year is out www2.gov.bc.ca.
| Counts | Does not count |
|---|---|
| Salaries, wages, bonuses, commissions, vacation pay | Employer contributions to an RPP, private health services plan, DPSP or RCA |
| Taxable allowances and taxable benefits | Retiring allowances and severance |
| Directors' fees and honorariums | Death benefits |
| Stock option benefits reported in T4 box 14 | Dividends |
| Employer RRSP contributions and group life premiums | Pensions paid to retirees |
The tax applies in the calendar year the payment is made, so a December bonus accrued but paid in January generally lands in the next year's base www2.gov.bc.ca.
What changes when BC presence starts partway through the year?
Both thresholds are prorated by the days the employer had a BC permanent establishment over 365 (s. 12) bclaws.gov.bc.ca. For 184 days, the province's associated employer example shows a $504,110 exemption and a $756,165 notch ceiling
www2.gov.bc.ca.
Register by December 31 of the first year your client owes the tax. When it stops having a BC permanent establishment, the final return is due 90 days later instead of March 31 www2.gov.bc.ca. The filing steps are on our BC EHT annual return page.
Sources
Did the BC EHT threshold change for 2026?
No. The $1,000,000 exemption and the $1,500,000 notch ceiling have applied since the 2024 return, and the Act current to October 6, 2026 still sets them at those amounts bclaws.gov.bc.ca.
Does an employer under $1,000,000 have to register?
No. Registration is required only when BC remuneration in the year is greater than the exemption amount, by December 31 of the first year the tax is owed www2.gov.bc.ca. Charities are the exception to watch: combined payroll over $1,500,000 means registering even when every location is under its own exemption.
Does severance count toward the threshold?
No. Retiring allowances and severance, death benefits, dividends and pensions paid to retirees are all excluded from BC remuneration www2.gov.bc.ca.
Who counts as an employer for BC EHT?
Individuals, corporations, partnerships, trusts and governments can all be employers. A joint venture is not an employer; each venturer is, and each tests its own BC remuneration against the threshold www2.gov.bc.ca.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.