BC Employer Health Tax 2026: Thresholds, Rates and the Cliff at $1.5M
Key takeaways
- Payroll of $1,000,000 or less pays nothing. The exemption doubled in 2024, so recheck rather than assume.
- Between $1M and $1.5M the rate is 5.85% of the amount above $1,000,000.
- Over $1.5M the exemption disappears entirely and you pay 1.95% of total payroll.
- Associated companies share one exemption. Two payrolls do not mean two exemptions.
- The 2026 return and final payment are due March 31, 2027.
The employer health tax is an annual tax on the B.C. remuneration an employer pays in a calendar year. Most small employers owe nothing. The ones who get caught are the businesses that grow past a threshold mid-year, and the groups of companies that assume each entity gets its own exemption.
The rates, and where the cliff sits
| B.C. remuneration | What you pay | Worked example |
|---|---|---|
| $1,000,000 or less | Nothing | Payroll of $850,000 pays $0 |
| $1,000,000.01 to $1,500,000 | 5.85% of the amount above $1,000,000 | Payroll of $1,200,000 pays 5.85% x $200,000 = $11,700 |
| Over $1,500,000 | 1.95% of total remuneration, no exemption | Payroll of $1,550,000 pays 1.95% x $1,550,000 = $30,225 |
Read the third row twice. Once you cross $1,500,000 the exemption is gone and the rate applies to every dollar, not just the excess. Payroll of $1,500,000 costs $29,250. Payroll of $1,550,000 costs $30,225. The extra $50,000 of payroll carries $975 of tax, which is reasonable. But moving from $1,499,999 to $1,500,001 is where the arithmetic changes shape, and it is worth knowing before you approve a December bonus run.
Who has to register
You must register if your B.C. remuneration is greater than the exemption amount. Employers include individuals, corporations, partnerships, trusts and governments. A joint venture is not an employer for this tax; the venturers are, individually.
If 2026 is your first year owing the tax, the deadline to register is December 31, 2026.
Associated employers share one exemption
This is the provision that produces the largest unexpected bills. If you are associated with other employers, the $1,000,000 exemption is shared across the group, and you agree how to allocate it.
Running two corporations with $700,000 of payroll each does not give you $2,000,000 of exemption. It gives you $1,000,000 across a combined $1,400,000, and tax on the difference.
If you started or stopped operating in BC partway through the year
Both figures are prorated by the days you had a permanent establishment in B.C.:
- Exemption: $1,000,000 x days in B.C. / 365
- Notch amount: $1,500,000 x days in B.C. / 365
A business that established itself in B.C. on September 1 has 122 days, so an exemption of about $334,247 and a notch amount of about $501,370. Payroll above that notch figure is taxed at 1.95% on the whole amount.
What counts as B.C. remuneration
The threshold is measured against B.C. remuneration, which is broader than the salary line in your accounts. It generally includes wages and salaries, bonuses, commissions, taxable benefits, and employer contributions to an employee’s RRSP.
Payments to a genuine independent contractor are not remuneration for this tax. That makes worker classification relevant here as well as for CRA, and a business sitting close to the threshold has an obvious incentive to get the classification question wrong. The province publishes the full definition of what counts as B.C. remuneration, and it is worth reading rather than assuming.
Who this actually catches
Most businesses that owe the tax unexpectedly fall into one of three groups:
- The business that grew. Payroll crossed $1,000,000 during the year, often through headcount added mid-year or a bonus paid in December.
- The group of companies. Two or three related corporations, each comfortably under the threshold on its own, combined well over it.
- The business that moved into B.C. A permanent establishment established partway through the year, with a prorated exemption far smaller than expected.
If your payroll is within roughly $150,000 of the exemption, the tax is worth modelling before you commit to a December bonus or a new hire. The cost of crossing a threshold is easier to plan for in October than to discover in March.
Instalments and the calculator
Employers above a certain amount of annual tax pay by instalment through the year rather than in one payment. For 2026 the instalment dates are June 15, September 15 and December 15, with the return and final payment due March 31, 2027.
The province publishes an employer health tax calculator that will give you an estimate in a minute, and it is the fastest way to find out whether this applies to you at all.
The 2026 dates
| What | When |
|---|---|
| Register, if 2026 is your first year paying | December 31, 2026 |
| Instalment | June 15, 2026 |
| Instalment | September 15, 2026 |
| Instalment | December 15, 2026 |
| File the return and make final payment | March 31, 2027 |
Frequently asked questions
What is the BC Employer Health Tax exemption for 2026?
Employers with B.C. remuneration of $1,000,000 or less pay nothing. The exemption doubled from $500,000 to $1,000,000 starting with the 2024 return, so a business that used to pay may not owe anything now. It is worth rechecking rather than assuming.
How is the BC EHT calculated?
Between $1,000,000.01 and $1,500,000 the tax is 5.85% of the amount above $1,000,000. Above $1,500,000 the exemption disappears entirely and the tax is 1.95% of your total B.C. remuneration, not just the portion over the threshold. That cliff is the part that surprises people.
When is the BC Employer Health Tax due?
For the 2026 calendar year, the return and final payment are due March 31, 2027. If you are required to pay instalments they fall on June 15, September 15 and December 15, 2026. If 2026 is your first year owing the tax, you must register by December 31, 2026.
Do associated companies share one exemption?
Yes. If you are associated with other employers, the $1,000,000 exemption is shared across the group rather than claimed by each company. Splitting a payroll across two corporations does not create two exemptions, and this is a common and expensive misunderstanding.
What if my business only operated in BC for part of the year?
Both the exemption and the notch amount are prorated by the number of days you had a permanent establishment in B.C., divided by 365. A business starting in September gets roughly a third of the exemption, not the whole thing.
Want a second opinion before you file?
If your payroll is anywhere near $1,000,000, or you run more than one company, the exemption question is worth settling before year end rather than in March.
We work with owner-managed businesses and property owners across British Columbia, Alberta, Manitoba, Saskatchewan and Ontario, from offices in Abbotsford, Langley and Brampton. Talk to us.
The employer health tax is one of several dates a B.C. employer juggles. See every Canadian tax deadline in one table for the CRA side, and our payroll services if the administration is what is actually costing you.