Canada Extends Federal Fuel Tax Suspension Through January 2027

Canada has extended the temporary suspension of the federal fuel excise tax on gasoline, diesel and aviation fuels through January 31, 2027, as the government seeks to ease fuel costs for households and businesses amid elevated energy prices and global supply disruptions.

Finance and National Revenue Minister François Philippe Champagne announced the extension on September 2. The federal excise tax will remain at zero through the end of January before returning at 50% of its regular rate for February and March 2027.

The measure means motorists will continue to save 10 cents per litre of gasoline compared with the regular federal excise tax rate. The suspension represents a saving of 4 cents per litre on diesel and also applies to aviation fuels.

Ottawa initially suspended the tax on April 20, 2026, in response to pressure on fuel prices caused by disruptions in global energy markets and conflict in the Middle East. The Department of Finance said gasoline prices fell by 11 cents per litre on the first day of the suspension, indicating that consumers received immediate relief at the pump.

The tax will begin returning on February 1. From February through March 31, 2027, the federal excise tax will be 5 cents per litre on gasoline and unleaded aviation gasoline, 5.5 cents on leaded aviation gasoline, and 2 cents per litre on diesel and aviation fuel.

Under the government's current legislative proposals, the full rates will return on April 1, 2027. Those rates are 10 cents per litre on gasoline and unleaded aviation gasoline, 11 cents on leaded aviation gasoline, and 4 cents per litre on diesel and aviation fuel.

The Department of Finance estimates the extension will provide about $2.9 billion in additional tax relief, bringing the estimated total relief for Canadians during the 2026-2027 fiscal year to approximately $5.3 billion.

The measure is also intended to reduce costs for trucking companies and businesses in the food, agriculture, housing, construction and delivery sectors, where fuel costs can feed into the prices consumers ultimately pay for goods and services.