BC Employer Health Tax (EHT) Guide 2026: Rates & Examples

As of the 2026 tax year, the British Columbia Employer Health Tax (EHT) works on a three-tier structure based on your total B.C. remuneration: payrolls of $1,000,000 or less are fully exempt, payrolls between $1,000,000 and $1,500,000 pay a 5.85% notch rate on the amount above $1,000,000, and payrolls over $1,500,000 pay 1.95% on the entire payroll with no exemption. The EHT is paid by the employer, not deducted from employees.

This guide explains the rates, shows worked examples at each tier, and covers registration, filing deadlines, and instalments for 2026.

How the BC Employer Health Tax works in 2026

The EHT is an annual payroll tax based on "B.C. remuneration" — broadly, the total wages, salaries, bonuses, taxable benefits, and most other employment payments you pay to employees who report to work in B.C. The more your payroll grows, the more the tax structure shifts, as shown below.

The $1,000,000 exemption was doubled from the previous $500,000 effective 2024 and remains at $1,000,000 for the 2026 tax year. Registered charitable and non-profit employers use a higher $1,500,000 exemption per qualifying location and have their own rate structure, which this guide does not cover in detail.

Why the 5.85% notch rate exists

The 5.85% rate in the middle tier looks high, but it only applies to the slice of payroll above $1,000,000. Its purpose is to phase out the exemption smoothly: as your payroll climbs from $1,000,000 to $1,500,000, the notch rate gradually claws back the benefit of the exemption so that, at exactly $1,500,000, the notch result equals 1.95% of the full payroll. Above $1,500,000, the flat 1.95% on the whole payroll takes over.

Worked examples for the 2026 tax year

Below are four employers with different B.C. payrolls, showing the EHT owed under the 2026 rules.

A few things to notice:

• At exactly $1,500,000, the notch calculation (5.85% × $500,000 = $29,250) equals 1.95% of the full $1,500,000 — the two methods meet, confirming the smooth phase-out.
• Just above $1,500,000, the calculation switches to 1.95% of the whole payroll. A payroll of $1,500,001 pays roughly $29,250, almost identical to the threshold — there is no sudden cliff at $1.5 million itself.
• The $2,000,000 employer pays 1.95% on every dollar, because the exemption is gone entirely once you exceed $1.5 million.

You can model your own numbers with the employer payroll cost calculator, which factors EHT alongside CPP, CPP2, and EI.

Registration, filing, and instalments

Registration. You must register for the EHT if your B.C. remuneration exceeds the $1,000,000 exemption in a calendar year. You must register by December 31 of that first year. Watch the associated-employer rules: a group of associated corporations shares a single $1,000,000 exemption, so you may owe EHT — and need to register — even if no single company in the group exceeds $1,000,000 on its own.

Annual return. Your EHT return and any remaining balance owing are due by March 31 of the following calendar year.

Quarterly instalments. If your EHT for the previous calendar year exceeded $2,925, you must make quarterly instalment payments during the current year. Each instalment is 25% of the lesser of (a) your prior-year EHT payable and (b) your estimated current-year EHT payable. The remaining balance is settled with your March 31 return.

What counts as B.C. remuneration

Getting the remuneration figure right is where many employers go wrong, because EHT is based on more than just base salary. B.C. remuneration generally includes salaries and wages, bonuses, commissions, vacation pay, taxable allowances and benefits, directors' fees, and amounts such as employer-paid group life insurance and certain stock-option benefits. It is measured for employees who report for work at a permanent establishment in B.C. — so a Vancouver employer with a remote worker in Alberta generally does not count that Alberta worker's pay toward B.C. remuneration. Conversely, payments to true independent contractors are not employment remuneration and fall outside the EHT base, though you should confirm worker classification before excluding them.

Common EHT mistakes to avoid

• Ignoring the associated-employer rules. Corporate groups share one $1,000,000 exemption. Splitting payroll across two related companies does not double the exemption.
• Forgetting taxable benefits. Leaving benefits and bonuses out of the remuneration figure understates EHT and can trigger reassessment and interest.
• Missing the instalment trigger. If last year's EHT exceeded $2,925, quarterly instalments are mandatory this year — not optional.
• Assuming the exemption applies above $1.5 million. Once payroll exceeds $1,500,000, the 1.95% rate applies to the whole payroll with no $1,000,000 deduction.

BC EHT vs. Alberta: a payroll-cost comparison

For employers weighing where to base staff, the EHT is a real cost difference between provinces. Alberta has no Employer Health Tax and no provincial payroll tax at all. A business with a $1,250,000 payroll pays $14,625 of EHT in B.C. but nothing equivalent in Alberta. Employers in both provinces still pay the federal payroll costs — CPP at 5.95% (on earnings up to the $74,600 YMPE for 2026), CPP2 at 4% (on the $74,600–$85,000 band), and EI — but only B.C. layers EHT on top once payroll crosses $1,000,000.

How RN Canada helps

RN Canada is an accounting and advisory firm with offices in Edmonton and Vancouver, working with employers and owner-managers on both sides of the Alberta–B.C. line. We help B.C. employers determine when EHT registration is triggered (including the associated-employer rules that catch corporate groups by surprise), calculate the correct EHT under the notch and flat-rate tiers, set up quarterly instalments, and meet the December 31 registration and March 31 filing deadlines. Our founder, Ozgur Duymaz, holds the CPA (Canada), ACCA (UK), and CMA (US) designations. Explore our bookkeeping and tax filing services, model costs with the employer payroll cost calculator, or browse common payroll questions.