Fuel Tax Relief Extended Into 2027
Under the announced plan, the temporary suspension of the federal excise tax on gasoline, diesel and aviation fuels would continue through January 31, 2027.
The measure would keep the federal excise-tax rates on the covered fuels suspended during the extended relief period.
The government introduced the temporary suspension on April 20, 2026, in response to rising fuel costs. The extension is intended to continue providing relief to households and businesses as they manage higher costs.
What Happens After January 2027
The federal government has set out a phased return toward the regular excise-tax rates after the extended suspension.
From February 1 through March 31, 2027, the federal excise tax would be set at 50% of the regular rate.
This would mean a staged transition rather than an immediate return to the full federal excise-tax rate after the January 31 deadline.
During that two-month period, the rates would be 5 cents per litre for gasoline and unleaded aviation gasoline, 5.5 cents for leaded aviation gasoline, and 2 cents for diesel fuel and other aviation fuel. The full rates—10 cents for gasoline and unleaded aviation gasoline, 11 cents for leaded aviation gasoline, and 4 cents for diesel and aviation fuel—would return on April 1, 2027.
Why the Government Extended the Relief
The federal government says the extension is part of its broader effort to make life more affordable for Canadians.
The Department of Finance said the measure would lower everyday costs for Canadians, including truckers and businesses in the food, agriculture, housing, construction and delivery sectors.
By temporarily reducing the federal fuel excise tax, the government aims to reduce some of the cost pressure associated with fuel.
Support for Businesses
The fuel-tax measure also applies to businesses that use the affected fuels.
The government specifically cited truckers and businesses in the food, agriculture, housing, construction and delivery sectors among those expected to benefit from the relief.
The government has also pointed to the wider effects of fuel costs on the prices of goods and services. Transportation and fuel expenses can form part of the cost structure behind products that Canadians purchase.
Federal Excise Tax and Pump Prices
When the temporary suspension first took effect on April 20, 2026, the Department of Finance said gasoline prices declined by 11 cents per litre on the first day of implementation.
The original suspension saved 10 cents per litre on gasoline and unleaded aviation gasoline, 11 cents per litre on leaded aviation gasoline, and 4 cents per litre on diesel fuel and other aviation fuel.
The extension would continue that suspended federal excise-tax rate through January 31, 2027.
Part of a Broader Affordability Effort
The fuel-tax extension comes as the federal government continues to focus on affordability and economic resilience.
The government says Canada is facing external pressures, including U.S. tariffs and conflicts abroad that are driving up prices. Extending fuel-tax relief is being presented as one measure to help households, workers and businesses navigate that uncertainty.
What Canadians Should Know
For consumers, the key date is January 31, 2027. Under the announced plan, the federal fuel excise-tax suspension would continue until that date.
Beginning February 1, half of the regular federal excise-tax rate would apply through March 31, 2027.
The measure would provide continued federal tax relief while setting out a phased return to the regular tax structure.
What Happens Next
The Department of Finance estimates that extending the suspension would have an additional fiscal impact of about $2.9 billion, bringing estimated total tax relief for Canadians in 2026-27 to $5.3 billion.
Full federal excise-tax rates would return on April 1, 2027.
Bottom Line
Canada has announced an extension of its temporary federal fuel excise-tax relief through January 31, 2027, keeping rates suspended on gasoline, diesel and covered aviation fuels during that period.
From February 1 through March 31, 2027, half of the regular federal excise-tax rate would apply before the full rates return on April 1.
The government says the extension is intended to provide additional cost relief as Canadians and businesses navigate economic uncertainty.