Key Takeaways
- Bill C-38 proposes extending the temporary federal fuel excise tax suspension until January 31, 2027.
- The extension is expected to provide an additional $2.9 billion in fuel tax relief.
- The government estimates total fuel tax relief for Canadians at $5.3 billion in 2026-27.
Federal Fuel Tax Suspension Extended
Under Bill C-38, the temporary suspension of the federal fuel excise tax would continue until and including January 31, 2027.
The measure applies to gasoline, aviation gasoline, diesel fuel and aviation fuel.
The federal government says the extension is intended to help lower everyday costs for Canadians while supporting businesses and sectors that rely on transportation.
Savings on a Typical 50-Litre Fill-Up
The Department of Finance Canada says Canadians would continue to save more than $5 on a typical 50-litre gasoline fill-up while the full relief remains in place.
The federal fuel excise tax was temporarily suspended on April 20, 2026, after the measure was introduced in spring 2026 to provide relief at the pump.
$2.9 Billion in Additional Relief
The government estimates that extending the fuel-tax relief would provide an additional $2.9 billion in fuel tax relief.
That would bring the total estimated fuel tax relief for Canadians to $5.3 billion in 2026-27.
The measure is also intended to support businesses involved in transportation, food, agriculture, housing, construction, delivery and aviation.
Reduced Fuel Tax Rates After January
The proposed legislation would keep the federal fuel excise tax suspended until January 31, 2027.
From February 1 through March 31, 2027, the proposed federal fuel excise tax rates would be:
| Fuel | Proposed rate |
|---|---|
| Gasoline and unleaded aviation gasoline | 5 cents per litre |
| Leaded aviation gasoline | 5.5 cents per litre |
| Diesel and aviation fuel | 2 cents per litre |
The government proposes returning the federal fuel excise tax to its full rates from April 1, 2027.
Support for Businesses and Supply Chains
The Department of Finance Canada says fuel costs affect businesses across the Canadian economy, including companies transporting food, building materials and other essential goods.
The proposed extension is therefore intended to provide relief beyond individual consumers by helping businesses manage transportation and operating costs.
Bottom Line
The Canadian government has introduced legislation proposing to extend the federal fuel excise tax suspension until January 31, 2027.
The Department of Finance Canada estimates that the extension would provide an additional $2.9 billion in fuel tax relief, bringing total estimated relief to $5.3 billion in 2026-27.