BC Luxury Car Tax: Rates, Thresholds, and ZEV Reductions

The BC luxury car tax is really two taxes layered on the same purchase: British Columbia’s Provincial Sales Tax, which climbs in steps from 7% to 20% as the price rises, and a separate federal luxury tax that applies to qualifying vehicles priced above $100,000. Add the 5% GST on top, and the total bite on a high-end car in B.C. can reach roughly a third of the purchase price.

PST Rates When Buying From a Dealer

For a non-zero-emission passenger vehicle bought from a registered dealer, the PST rate is set by the full purchase price, not by the amount over each threshold:

Under $55,000: 7%
$55,000 to $55,999.99: 8%
$56,000 to $56,999.99: 9%
$57,000 to $124,999.99: 10%
$125,000 to $149,999.99: 15%
$150,000 and over: 20%

The jumps at $125,000 and $150,000 are where the tax bill changes shape. A $124,999 vehicle carries $12,500 in PST; at $125,000, the same tax reaches $18,750. Cross $150,000 and PST on a $150,000 vehicle is $30,000.¹

“Passenger vehicle” here means a motor vehicle designed primarily to carry people. Trucks and vans larger than three-quarter ton, camperized vans, motor homes, buses, and motorcycles with engines of 250 cc or less fall outside that definition and pay a flat 7% PST from a dealer no matter the price.¹

Private Sales Are Taxed Differently

Buy privately and the rate table shifts in one place: passenger vehicles under $55,000 are taxed at 12% rather than 7%. From $55,000 up, the private-sale rates match the dealer schedule exactly, topping out at 20% for vehicles at $150,000 or more.²

Private buyers face one more rule. PST is calculated on the greater of the purchase price or the vehicle’s average wholesale value from the Canadian Black Book. Writing a low number on the bill of sale does not lower the tax. If you believe the actual value is below the Black Book figure, you can submit a Motor Vehicle Appraisal Form (FIN 320) to the Ministry of Finance, and PST will then be based on the greater of the appraised value and the purchase price.²

Reduced Thresholds for Zero-Emission Vehicles

Battery electric, hydrogen fuel cell, and other zero-emission vehicles get a higher entry point before the escalating rates start. The tiers do not begin until $75,000 instead of $55,000, so most electric vehicles on the market stay at the base 7% rate:³

Under $75,000: 7%
$75,000 to $75,999.99: 8%
$76,000 to $76,999.99: 9%
$77,000 to $124,999.99: 10%
$125,000 to $149,999.99: 15%
$150,000 and over: 20%

These reduced thresholds cover dealer purchases, imports, and leased ZEVs, and are in effect until February 22, 2027.³

The Federal Luxury Tax Above $100,000

The federal Select Luxury Items Tax Act adds another layer on any qualifying vehicle priced above $100,000. To be a “subject vehicle,” it must be designed primarily to carry people on roads, seat no more than 10, have a gross vehicle weight rating of 3,856 kg or less, have been manufactured after 2018, and travel on four or more wheels.⁴

The build-date criterion matters. A used luxury car manufactured in 2018 or earlier falls outside the Act regardless of price, which is one of the few clean ways to sidestep the federal tax on a high-value purchase.

The tax is the lesser of two calculations:⁵

Method A: 10% of the full vehicle price
Method B: 20% of the amount above $100,000

Near the threshold, Method B is smaller. On a $120,000 vehicle, Method A yields $12,000 while Method B yields $4,000, so you pay $4,000. The two methods match at $200,000 (both $20,000); above that, Method A becomes the lower figure and effectively caps the rate at 10% of price. The $100,000 threshold has not been adjusted for inflation since the tax took effect in September 2022, so more models cross the line each year. The tax applies to the first retail sale or importation of a qualifying vehicle, and to leases.⁴

What the Full Tax Stack Looks Like

A luxury purchase in B.C. carries three separate taxes: 5% federal GST, PST at the applicable tier, and (above $100,000) the federal luxury tax. Each is calculated independently on the purchase price rather than stacked on top of one another.

Take a $160,000 non-ZEV passenger vehicle from a B.C. dealer:

GST: 5% of $160,000 = $8,000
PST: 20% of $160,000 = $32,000 (the $150,000+ rate applies to the full price)
Federal luxury tax: lesser of $16,000 (10% of $160,000) or $12,000 (20% of $60,000 over the threshold) = $12,000
Total taxes: $52,000

That works out to a 32.5% effective tax rate. Closer to the federal threshold, the numbers ease considerably. A $105,000 vehicle pays $5,250 GST, $10,500 PST at the 10% rate, and $1,000 in federal luxury tax (20% of the $5,000 over the threshold), for a total of $16,750.

Using a Trade-In to Lower the PST Base

A dealer trade-in can reduce the purchase price used to calculate PST, which can drop you into a lower rate bracket. The reduction only applies if you previously paid PST on the traded-in vehicle (or its predecessors: the TDP, SST, or the B.C. portion of the HST).²

On a $130,000 purchase with a $10,000 trade-in, the taxable price for PST purposes becomes $120,000. That moves the deal from the 15% bracket into the 10% bracket, cutting PST by $6,000. The trade-in reduction affects only PST. GST and the federal luxury tax remain calculated on the retail price.

Leases Follow the Same Rate Structure

Leasing does not sidestep the elevated PST tiers. For leases, the PST rate is set by the vehicle’s “tax rate value,” generally the fair market value on the date the lease begins. If that value sits in the $150,000+ bracket, 20% PST applies to every lease payment, including the down payment and each monthly installment.³

The federal luxury tax also applies to leased vehicles valued above $100,000. The lessor is responsible for remitting it, though the cost is generally built into the lease terms.⁴

Exemptions and Reductions

Vehicles Modified for Persons With Disabilities

If a vehicle has been manufactured or modified to transport someone using a wheelchair, or fitted with auxiliary driving controls for a person with a disability, the cost of those modifications comes off the purchase price before PST is calculated. For a new vehicle, the deduction is determined by comparing the selling price to the same model without the modifications. For a used vehicle, only the charges directly related to the disability modifications qualify.³

If a wheelchair-accessible van carries $20,000 in modifications on a $70,000 purchase price, PST is calculated on $50,000, which keeps the deal in the 7% bracket rather than 10%.

Non-Passenger and Commercial Vehicles

Vehicles outside the “passenger vehicle” classification pay a flat 7% PST from a dealer regardless of price. That covers trucks and vans larger than three-quarter ton, motor homes, camperized vans, buses, and motorcycles of 250 cc or less. A high-end pickup or motor home avoids the tiered provincial rate entirely.¹

The federal luxury tax has its own carve-outs. Vehicles equipped for military or policing activities are exempt, and any vehicle manufactured in 2018 or earlier falls outside the Act regardless of price or type.⁴

When and How the Tax Is Collected

Dealer purchases: the dealer collects PST at the point of sale. Private purchases, gifts, and vehicles brought into B.C. from another province: ICBC collects the PST when you register the vehicle. If you do not register right away, you are required to remit the tax by the last day of the month following the purchase using a Casual Remittance Return (FIN 405).²

If you pay PST directly to the Ministry of Finance before registering, bring proof of payment to ICBC. Without that proof, ICBC will collect the tax again at the counter and any refund has to be pursued through the Ministry, since neither ICBC nor Autoplan brokers can process tax refunds.¹

1
ICBC. PST on Vehicles
2
Government of British Columbia. PST on Vehicles (Bulletin PST 308)
3
Government of British Columbia. Motor Vehicle Dealers and Leasing Companies (Bulletin PST 116)
4
Canada.ca. LTN2 Subject Vehicles Under the Select Luxury Items Tax Act
5
Justice Laws Website. Select Luxury Items Tax Act