CANADA • CONFIRMED LAW • Government announcement 29 October 2026
Canada extends federal fuel excise tax relief through January 2027
Bill C-38, the Canadian Fuel Affordability Act, received Royal Assent. The existing federal excise-tax suspension for petrol and diesel continues until 31 January 2027. This is an extension of existing relief, not an additional immediate price cut at the pump.
Federal excise tax per litre
| Period | Unleaded petrol | Diesel |
|---|---|---|
| Until 31 January 2027 | 0¢ (10¢ relief) | 0¢ (4¢ relief) |
| 1 February – 31 March 2027 | 5¢ | 2¢ |
| From 1 April 2027 | 10¢ | 4¢ |
What this means for drivers and fleets
Drivers retain the federal tax relief through January. Delivery companies and fleet managers can plan for the scheduled partial restoration in February and full restoration in April. Actual retail fuel prices also depend on provincial taxes, wholesale prices and retailer pricing. A 50-litre petrol fill-up benefits from CAD $5 of federal excise-tax relief relative to the standard 10¢ rate while the suspension applies.
Example: how the federal excise change affects a commute
A driver covering 1,200 km each month in a vehicle averaging 8 L/100 km purchases approximately 96 litres of petrol for that driving. Compared with the normal federal 10-cent excise tax, the full suspension represents a CAD 9.60 monthly tax difference on that fuel volume. From February through March 2027, the proposed return of 5 cents/L would equal CAD 4.80 of federal excise on that same volume; from April, 10 cents/L would equal CAD 9.60. These figures isolate the federal excise component and are not predictions of the future retail price.
Tank-fill comparison: petrol and diesel
| Illustrative purchase | Through January 2027: federal excise | February–March 2027 | From April 2027 |
|---|---|---|---|
| 50 L regular petrol | CAD 0.00 | CAD 2.50 | CAD 5.00 |
| 50 L diesel | CAD 0.00 | CAD 1.00 | CAD 2.00 |
This table shows the federal excise tax component only, not the cost of buying 50 litres. Differences in the wholesale market, provincial and territorial taxes, carbon-related policies where applicable, distribution and retailer margins can outweigh the scheduled excise change. A pump price may rise or fall even when the federal excise rate stays the same.
How drivers should use this information
For a weekend road trip or regular commuting budget, use the Canada fuel-cost calculator with your local fuel price and measured consumption. The calculator multiplies trip distance by L/100 km, then by your CAD/L pump price. Avoid manually subtracting the tax relief again from a retail pump price, because the prevailing price already reflects applicable taxes and competitive conditions.
If you operate deliveries or a vehicle fleet, compare three budget scenarios with the same consumption: unchanged pump rates, a 5-cent/L higher petrol rate during the half-rate period, and a 10-cent/L higher rate at full restoration. These are tax-only sensitivities, not a forecast that prices will rise by precisely those amounts. A 10,000-litre petrol purchase would have a CAD 500 federal excise component at 5 cents/L and CAD 1,000 at 10 cents/L.
Does this apply to provincial gasoline taxes?
No. Bill C-38 concerns the federal excise tax and does not independently repeal provincial fuel taxes or other applicable charges. It also does not mandate identical retail prices between Vancouver, Calgary, Toronto, Ottawa and Halifax. Check local prices before travelling and confirm fuel grade: a national regular-gasoline reference should not be treated as a diesel quote.
Verification and methodology
Verified against the Department of Finance Canada announcement of 29 October 2026 and the Canada Revenue Agency's updated October 2026 excise notice, both linked below. The calculations above are original MyDriveCost examples, not estimates published by the government. Last editorial check: .
Official sources
Department of Finance Canada — 29 October 2026