Lexus Guide
How Much Tax Do You Pay When Buying a Car in BC? Gas, Hybrid, EV, PHEV & Luxury Tax Explained
Learn how GST, B.C. PST brackets, ZEV treatment, PHEV rules and Canada’s federal luxury tax can affect the final price of a vehicle in British Columbia.
By Frank Qian — Lexus Product Advisor & Automotive Sales Professional in Vancouver, BC
One of the questions I get regularly from vehicle buyers in British Columbia is:
“How much tax am I actually going to pay on this car?”
The answer isn’t always 12%.
In B.C., the amount of tax you pay on a passenger vehicle can change substantially depending on the vehicle’s price and, in some cases, whether it qualifies as a zero-emission vehicle.
There’s also a completely separate federal luxury tax that can apply to certain vehicles over $100,000.
That means someone buying a $50,000 vehicle, a $70,000 hybrid, an $80,000 plug-in hybrid and a $150,000 luxury SUV can face very different tax treatment.
Here’s how it works.
First: GST and PST Are Separate in British Columbia
Unlike provinces that use HST, British Columbia generally has two sales taxes:
GST — Goods and Services Tax
and
PST — Provincial Sales Tax
GST is generally 5%.
The confusing part when buying a vehicle is the PST, because B.C. uses different PST rates depending on the price and type of passenger vehicle.
Regular Gasoline and Non-Plug-In Hybrid Vehicles
For a passenger vehicle purchased from a GST-registered dealer, the current B.C. PST rates are:
| Vehicle Price | B.C. PST Rate |
|---|---|
| Less than $55,000 | 7% |
| $55,000–$55,999.99 | 8% |
| $56,000–$56,999.99 | 9% |
| $57,000–$124,999.99 | 10% |
| $125,000–$149,999.99 | 15% |
| $150,000+ | 20% |
These rates apply to conventional passenger vehicles and regular hybrids that don’t qualify for B.C.’s ZEV treatment.
A common misconception is that the higher rate applies only to the portion above the threshold.
It doesn’t.
Once the vehicle falls into a higher PST bracket, that PST rate generally applies to the taxable purchase price, not just the dollars above the threshold.
For example, a $60,000 passenger vehicle isn’t taxed at 7% on the first $55,000 and 10% on the remaining $5,000.
Its applicable PST rate is 10%.
Example: $50,000 Vehicle
Let’s keep the example simple and ignore other taxable fees.
Purchase price: $50,000
GST at 5%: $2,500
PST at 7%: $3,500
Total sales tax: $6,000
So the simplified total becomes: $56,000
Example: $60,000 Vehicle
At $60,000, the passenger vehicle has crossed the $57,000 threshold.
GST at 5%: $3,000
PST at 10%: $6,000
Total sales tax: $9,000
Simplified total: $69,000
That $57,000 threshold is therefore important when comparing vehicle prices.
What About a Regular Lexus Hybrid?
This is an important distinction.
A conventional self-charging hybrid such as a typical Lexus hybrid does not automatically receive the special B.C. ZEV PST thresholds simply because it uses an electric motor and battery.
The vehicle needs to qualify as a zero-emission vehicle under the applicable B.C. rules.
So a regular non-plug-in hybrid is generally subject to the normal passenger-vehicle PST brackets.
EVs and Qualifying Plug-In Hybrids Are Different
B.C. currently provides higher PST price thresholds for qualifying zero-emission vehicles (ZEVs).
For these purposes, ZEVs can include:
- Battery-electric vehicles
- Hydrogen fuel-cell vehicles
- Qualifying plug-in hybrid electric vehicles (PHEVs)
The current dealer-purchase PST brackets for qualifying ZEV passenger vehicles are:
| ZEV Price | B.C. PST Rate |
|---|---|
| Less than $75,000 | 7% |
| $75,000–$75,999.99 | 8% |
| $76,000–$76,999.99 | 9% |
| $77,000–$124,999.99 | 10% |
| $125,000–$149,999.99 | 15% |
| $150,000+ | 20% |
So the important difference is the point at which the higher PST rates begin.
For a regular passenger vehicle, the progression starts at $55,000.
For a qualifying ZEV, it currently starts at $75,000.
These special ZEV thresholds are currently scheduled to remain in effect until February 22, 2027, after which the rules are scheduled to change unless the government extends or replaces them.
Example: $70,000 Gasoline Vehicle vs $70,000 EV
This makes the difference easy to see.
$70,000 regular passenger vehicle
GST: 5% = $3,500
PST: 10% = $7,000
Total sales tax: $10,500
$70,000 qualifying EV
GST: 5% = $3,500
PST: 7% = $4,900
Total sales tax: $8,400
That’s a difference of: $2,100 on two vehicles with the same $70,000 simplified purchase price.
What About a PHEV?
This is particularly relevant to Lexus shoppers considering plug-in hybrid models.
A qualifying plug-in hybrid electric vehicle can fall under B.C.’s ZEV treatment.
That means it may receive the same higher PST thresholds shown above rather than the normal gasoline/non-plug-in-hybrid thresholds.
This is one reason it’s important not to assume that:
Hybrid = PHEV = EV
from a tax perspective.
They aren’t necessarily treated the same.
What About Used EVs and PHEVs?
This is another area where buyers may have heard outdated information.
B.C. previously offered a PST exemption for qualifying used zero-emission vehicles.
That exemption ended May 1, 2025.
So if you’re shopping for a used EV or PHEV today, don’t assume it’s automatically PST-free because someone bought a used EV without PST a few years ago.
Tax programs change.
Then There’s the Federal Luxury Tax
This is completely separate from B.C.’s higher PST rates.
Canada has a federal Select Luxury Items Tax that can apply to certain passenger vehicles priced above $100,000.
For a subject vehicle over the $100,000 threshold, the luxury tax is generally calculated as the lesser of:
10% of the taxable amount
or
20% of the amount above $100,000.
That wording is important.
It does not simply mean every vehicle over $100,000 gets charged another 10%.
Example: $110,000 Vehicle
Using a simplified $110,000 taxable amount:
Method 1 — 10% of $110,000: $11,000
Method 2 — 20% of the amount above $100,000: $110,000 − $100,000 = $10,000; 20% × $10,000 = $2,000
The government uses the lower amount.
So the federal luxury tax would be: $2,000, not $11,000.
Example: $150,000 Vehicle
Now take a simplified taxable amount of $150,000.
Method 1 — 10% × $150,000: $15,000
Method 2 — ($150,000 − $100,000) × 20%: $10,000
The lower amount is: $10,000
So the federal luxury tax would be $10,000.
Example: $200,000 Vehicle
At $200,000:
10% of $200,000: $20,000
20% of the $100,000 above the threshold: $20,000
Both calculations produce the same result.
Above that crossover point, the 10% calculation generally becomes the limiting calculation.
Does the Federal Luxury Tax Apply to EVs and PHEVs?
Potentially, yes.
Being electric or plug-in hybrid does not by itself exempt an otherwise qualifying vehicle from Canada’s federal luxury tax.
The federal rules look at whether the vehicle meets the definition of a subject vehicle and whether its taxable amount exceeds the $100,000 threshold.
So it’s possible for an EV or PHEV to benefit from B.C.’s special ZEV PST thresholds while still being subject to the federal luxury tax if the federal requirements are met.
These are two separate tax systems.
Does GST Apply to the Federal Luxury Tax?
Here’s another detail buyers sometimes don’t expect.
Yes, GST can apply to an amount that includes the federal luxury tax.
The CRA’s own examples calculate GST after adding the applicable luxury tax.
For example, if a simplified vehicle transaction had:
Vehicle taxable amount: $150,000
Federal luxury tax: $10,000
the amount used for the GST calculation can include that luxury tax.
This is one reason the final total on a vehicle subject to luxury tax can be higher than someone expects from simply adding “5% GST.”
Does B.C. PST Apply on Top of the Federal Luxury Tax?
B.C. treats this differently.
The provincial government specifically excludes the federal luxury tax itself from the purchase price used to calculate B.C. PST.
So while GST can effectively apply after the federal luxury tax is added, B.C. PST does not apply to the federal luxury-tax amount itself.
What About B.C.’s 15% and 20% PST Rates?
This is where people sometimes confuse two completely different taxes.
B.C. has higher PST rates for expensive passenger vehicles:
15% PST at $125,000–$149,999.99
and
20% PST at $150,000 and above.
People sometimes call this a “luxury tax.”
But it isn’t the same thing as the federal Select Luxury Items Tax.
A sufficiently expensive vehicle can therefore be affected by:
5% federal GST
B.C. PST at the applicable vehicle rate
and
the federal luxury tax
in the same transaction.
Example: Simplified $150,000 Regular Passenger Vehicle
This is where the numbers become significant.
Assume a simplified taxable vehicle price of exactly: $150,000
Federal luxury tax: $10,000
B.C. PST rate at this vehicle price: 20%
Simplified PST on $150,000: $30,000
GST calculation can include the luxury tax: $150,000 + $10,000 = $160,000
5% GST: $8,000
So the simplified total becomes:
Vehicle: $150,000
Federal luxury tax: $10,000
B.C. PST: $30,000
GST: $8,000
Simplified total: $198,000
That’s $48,000 above the $150,000 vehicle price before considering other applicable charges, accessories or fees.
This is why understanding tax brackets becomes increasingly important when shopping for higher-priced vehicles.
Does a Trade-In Reduce Tax?
Potentially, and this is an important topic on its own.
For qualifying vehicle purchases in B.C., an accepted trade-in can reduce the taxable purchase price used for calculating PST when the applicable conditions are met.
There are specific rules around this, and leases are treated differently.
I’m going to cover trade-ins and their tax implications in a separate guide, because that’s worth understanding properly rather than reducing it to one paragraph.
The Biggest Mistake: Assuming Every Vehicle Is “12% Tax”
I hear this frequently:
“Tax is just 12%, right?”
Sometimes.
A passenger vehicle under $55,000 purchased from a GST-registered dealer generally has:
5% GST + 7% PST = 12%.
But once you move into more expensive vehicles, that shortcut stops working.
A regular passenger vehicle at $60,000 is generally: 5% GST + 10% PST.
A qualifying $60,000 EV may still be: 5% GST + 7% PST.
And once you’re shopping above $100,000, you also need to consider whether the federal luxury tax applies.
Quick Reference
Regular gasoline & non-plug-in hybrid passenger vehicles
| Price | PST |
|---|---|
| Under $55,000 | 7% |
| $55,000–$55,999.99 | 8% |
| $56,000–$56,999.99 | 9% |
| $57,000–$124,999.99 | 10% |
| $125,000–$149,999.99 | 15% |
| $150,000+ | 20% |
Plus 5% GST.
Qualifying EV & PHEV passenger vehicles
| Price | PST |
|---|---|
| Under $75,000 | 7% |
| $75,000–$75,999.99 | 8% |
| $76,000–$76,999.99 | 9% |
| $77,000–$124,999.99 | 10% |
| $125,000–$149,999.99 | 15% |
| $150,000+ | 20% |
Plus 5% GST.
Current special ZEV thresholds are scheduled to end after February 22, 2027 unless changed or extended.
Federal Luxury Tax
For qualifying subject vehicles above $100,000:
Lesser of:
10% of taxable amount
OR
20% of the amount above $100,000.
My Advice Before Buying
When comparing vehicles in B.C., don’t look only at MSRP or selling price.
Ask for the actual before-tax and after-tax numbers.
This becomes particularly important when you’re comparing vehicles on opposite sides of one of B.C.’s PST thresholds.
A few thousand dollars difference in vehicle price can sometimes move the entire vehicle into another PST bracket.
And if you’re considering a vehicle over $100,000, ask whether the federal luxury tax applies and what amount is being used to calculate it.
Tax rules also change.
The information in this guide reflects the rules available at the time of writing and is intended as general information, not tax or legal advice. Always confirm the current treatment applicable to your particular transaction.
About Frank Qian
I’m Frank Qian, a Lexus Product Advisor at Regency Lexus in Vancouver, British Columbia, with nearly a decade of experience in automotive sales.
One of the most confusing parts of purchasing a vehicle isn’t always choosing the vehicle — it’s understanding the numbers involved in the transaction.
I created FrankQian.ca to provide straightforward explanations of Lexus vehicles, vehicle comparisons, hybrids and PHEVs, leasing and financing, trade-ins and the vehicle-buying process in British Columbia.
If you’re considering a Lexus in Vancouver and want help understanding the vehicle or purchase process, feel free to contact me.
About Frank Qian
Frank Qian is a Lexus Product Advisor and Automotive Sales Professional at Regency Lexus in Vancouver, BC, with nearly a decade of automotive sales experience. He shares practical vehicle guidance through FrankQian.ca, his independent professional informational website.