2025 provincial budget commentary

Alberta’s provincial government introduced its 2025 budget and fiscal plan (Alberta Budget 2025) with new measures intended to manage the unique political and economic climate—including the looming threat of U.S. tariffs and the federal government’s proposed increase to the capital gains inclusion rate.

The province’s budget does not introduce significant tax expenditures. This may be due to projected deficits because of threatened U.S. tariffs and the reduction of oil prices.

Delivered by provincial Finance Minister Nate Horner, Alberta Budget 2025 noted that eliminating interprovincial trade barriers could help investment and productivity gains across the country and aid in managing existing uncertainties.

Individual tax measures

New personal income tax bracket

Alberta’s government introduced a new personal income tax bracket of 8 per cent on the first $60,000 of income, effective Jan. 1, 2025, as part of its goal to reduce income taxes. The measure was previously announced in last year’s budget.

Taxpayers in the province will start seeing the reduction in payroll withholdings on their paycheques after July 1, 2025. From 2026 onwards, this tax bracket will be adjusted annually for inflation. However, any increases will require consultation through a referendum as required by the Alberta Taxpayer Protection Act.

The new tax rate is expected to provide further financial relief to taxpayers—in comparison to other provinces—and boost Alberta’s tax competitiveness.

Supplemental credit

Alberta Budget 2025 introduced a new tax credit designed to ensure that Albertans who claim more than $60,000 in non-refundable tax credits do not face higher taxes due to the new tax bracket.

While such a scenario may be uncommon, it could affect individuals earning over $60,000 who also claim significant amounts of non-refundable credits.

This credit, effective for the 2025 tax year, will be 2 per cent of the total non-refundable tax credits that exceed $60,000 and will be adjusted annually starting in 2026.

By implementing this measure, Alberta’s government aims to provide additional financial relief while maintaining fairness in the tax system to ensure that taxpayers are not unduly penalized for claiming legitimate tax credits.

Other tax measures

Education property tax

Alberta’s budget also outlined an increase in education property taxes. The following will take effect in the 2025-26 fiscal year:

• Residential and farmland properties will see an increase to $2.72 per $1,000 of equalized assessment of the property’s value.

• Non-residential properties will see an increase to $4.00 per $1,000 of equalized assessment of the property’s value.

This follows a freeze in education property tax increases from the 2024-25 fiscal year.

Locomotive fuel tax

Tax on fuel used to operate trains, including generating heat or light, will increase from 5.5 cents per litre to 6.5 cents per litre effective March 1, 2025. This change puts Alberta’s tax rate for this fuel in alignment with other Prairie provinces.

Cancelled tax credit programs

As of Dec. 31, 2025, taxpayers in the province will no longer be able to use late filings and reassessments to claim the previously eliminated Alberta climate leadership adjustment rebate and Alberta family employment tax credit.

The Alberta government cited overly burdensome administration costs in maintaining the programs.

British Columbia’s provincial budget and fiscal plan for 2025 (B.C. Budget 2025) includes measures intended to attract business investments, encourage housing affordability and support families.

The budget, delivered by provincial Finance Minister Brenda Bailey on the same day widespread U.S. tariffs took effect, emphasized the importance of implementing measures to mitigate any immediate economic impact while also fostering long-term economic stability.

Individual tax measures

New speculation and vacancy tax rates

Effective Jan. 1, 2026, B.C. will increase speculation and vacancy tax (SVT) rates from 0.5 per cent to one per cent for Canadian citizens and permanent residents who are taxed worldwide earners. The budget also stated the rate for foreign owners and untaxed worldwide earners will increase from two per cent to three per cent.

These new rates will not affect taxpayers that need to file tax declarations for the use of residential property (RP) in 2025 or earlier calendar years. Additionally, the non-refundable SVT credit for B.C. residents will be doubled from $2,000 to $4,000.

The increase in SVT rates aims to deter taxpayers from using RPs as investment assets and instead encourage their use as primary residences.

Amendments to B.C. family benefit

Effective Jan. 1, 2025, B.C. family benefit payments will continue for six months after a child's death to grieving families. This puts the province in alignment with a similar federal amendment to the Canada Child Benefit.

The benefit aims to provide continued support to affected families after a child's death.

Changes to training tax credit for apprentices

The training tax credit for individuals will be extended for three additional years—until the end of 2028.

Furthermore, taxpayers eligible for the enhanced credit for First Nations individuals and persons with disabilities will continue to receive the enhanced credit effective April 1, 2025.

The amendment—which extends beyond the expiration of the federal apprenticeship incentive grant on March 31, 2025—aims to support a more diverse workforce in trades.

Corporate tax measures

Small business venture capital program budget and tax credit

B.C. Budget 2025 proposed increases to the small business venture capital program and tax credit in an effort to encourage equity investments in the province’s businesses.

Effective for 2025 and subsequent taxation years, the annual credit limit a taxpayer can claim for investments made on or after March 4, 2025 increased from $120,000 to $300,000.

The credit applies to investments made in shares of a registered venture capital corporation or an eligible business corporation.

Clean buildings tax credit deadlines extended

To support the CleanBC initiative, a refundable income tax credit is provided for qualifying retrofits to eligible commercial and multi-unit residential buildings with four or more units. The credit amount is five per cent of qualifying expenditures.

The new budget proposed extending the following deadlines to continue supporting investment into clean buildings:

• Qualifying expenditures deadline moved to March 31, 2026 (from April 1, 2025).
• Qualifying retrofit completion date moved to March 31, 2027 (from April 1, 2026).
• Retrofit certificate application submission due date moved to Sept. 30, 2028 (from Sept. 30, 2027).
• Energy usage intensity measurement moved to March 31, 2028 (from March 31, 2027).

Film and interactive digital media tax credits amendments

B.C. Budget 2025 introduced several amendments to tax credits relevant to the film, animation and interactive digital media industries.

The basic film incentive B.C. tax credit will increase from 35 per cent to 40 per cent and the basic production services tax credit will increase from 28 per cent to 36 per cent—effective for productions with principal photography beginning on or after Jan. 1, 2025.

A new major production tax credit is now available, effective Jan. 1, 2025, which equals two per cent of accredited qualified B.C. labour expenditures in respect of the major production. Claimants with B.C. production costs greater than $200 million are eligible, and the credit is available upon completion of the production.

Effective Jan. 1, 2025, the regional and distant location tax credits will be available for animation productions—provided the following criteria are met:

• Principal photography begins on or after Jan 1, 2025.
• Production takes place in a physical office in a regional or distant location.
• Workers are physically present and working in the office at least 50 per cent of the time.

Beginning Sept. 1, 2025, the interactive digital media tax credit will increase to 25 per cent (up from 17.5 per cent) for eligible salaries and wages paid in the province. The budget also proposed that the program be made permanent.

Other tax measures

Provincial sales tax reinstated on used zero-emission vehicles

Starting May 1, 2025, used zero-emission vehicles will be subject to provincial sales tax (PST). This ends the exemption introduced in the 2022 budget that was originally set to expire in 2027.

Provincial sales tax adjustment for out-of-province vehicles

Effective on royal assent, amendments to the Provincial Sales Tax Act will clarify that the PST payable on vehicles brought into B.C. for personal use is reduced by the amount of B.C. sales tax already paid by the person on the vehicle.

Carbon tax increase and climate action tax credit

B.C.’s government intends to ensure that revenue from federal carbon tax increases is returned to British Columbians through the climate action tax credit. Annual carbon tax increases are currently set at $15/tonne until it reaches $170/tonne in 2030.

Due to lower-than-expected revenue and uncertainty around federal carbon pricing, the province’s 2024-25 climate action tax credit amounts will be maintained for the 2025-26 year.

Exemption for First Nations property ownership

Effective May 21, 2024, First Nations are exempt from property transfer tax when transferring legal ownership of a property to the First Nation—provided they beneficially owned prior to the effective date.