What drivers and businesses need to know about the phased return
The temporary suspension of the federal excise tax on gasoline, diesel and certain aviation fuels will continue through January 31, 2027.
Bill C-38, the Canadian Fuel Affordability Act, received Royal Assent on October 29, 2026. This means the extension is enacted legislation, not a proposal or pending bill.
The covered excise tax rates will return in two stages. Half of the regular rates will apply during February and March 2027, followed by the full rates on April 1, 2027.
When will the federal fuel excise tax return?
The original temporary suspension began on April 20, 2026. The enacted extension establishes the following schedule:
| Period | Federal excise tax treatment |
|---|---|
| Through January 31, 2027 | Full suspension on covered fuels |
| February 1 to March 31, 2027 | 50 per cent of the regular rates |
| Starting April 1, 2027 | Full federal excise tax rates |
Royal Assent did not cause the full rates to return immediately. The full suspension remains in place until the end of January 2027.
Rates for gasoline, diesel and aviation fuels
The measure covers gasoline, unleaded aviation gasoline, leaded aviation gasoline, diesel fuel and aviation fuel. The applicable amounts differ by fuel:
| Fuel | Relief through January 31, 2027 | Rate from February 1 to March 31, 2027 | Full rate from April 1, 2027 |
|---|---|---|---|
| Gasoline and unleaded aviation gasoline | 10 cents per litre | 5 cents per litre | 10 cents per litre |
| Diesel fuel and aviation fuel | 4 cents per litre | 2 cents per litre | 4 cents per litre |
| Leaded aviation gasoline | 11 cents per litre | 5.5 cents per litre | 11 cents per litre |
The supplied government information does not establish relief for fuels outside these categories.
How much could a gasoline fill save?
Finance Canada says the full suspension saves Canadians more than $5 when filling a typical 50-litre gasoline tank. That statement applies while the full suspension remains in effect and uses the department’s stated 50-litre assumption.
No official personal diesel-tank saving example is provided. For diesel, the established figures are relief of 4 cents per litre during the full suspension, a 2-cent-per-litre rate in February and March 2027, and the full 4-cent-per-litre rate beginning April 1, 2027.
Retail fuel prices may not move by the same amount
The measure concerns the federal fuel excise tax only. It does not suspend provincial taxes, sales taxes or other components of retail fuel prices.
The enacted tax schedule also does not guarantee that pump prices will change cent for cent, or that a tax-rate adjustment will be reflected completely or immediately in retail prices.
Finance Canada reported that gasoline prices declined by 11 cents per litre on April 20, 2026, the first day of the original suspension. That is a historical observation and does not guarantee the same retail-price effect during the extension or when the tax returns in stages.
Who is affected?
The measure matters to Canadians who use gasoline or diesel, as well as users of leaded or unleaded aviation gasoline and aviation fuel.
It can also affect truckers and businesses operating in sectors including food, agriculture, housing, construction, delivery and aviation. Actual savings for any household or business will depend on its circumstances and cannot be guaranteed from the government’s aggregate estimates.
Finance Canada expects the extension to provide an additional $2.9 billion in relief. It estimates total fuel tax savings of $5.3 billion in 2026–27. These are government expectations and estimates, not realized or guaranteed savings for a particular person or business.
Do You Need to Do Anything?
The supplied government sources identify no application, registration, filing requirement, income test or age test for consumers or businesses.
Drivers and businesses may want to account for the scheduled dates when planning fuel costs:
- The full suspension ends after January 31, 2027.
- Half of the regular rates applies from February 1 through March 31, 2027.
- Full federal excise tax rates return on April 1, 2027.
Bottom Line
Bill C-38 is now law, and the full federal excise tax suspension on the covered fuels continues through January 31, 2027. The tax will then return at half its regular rates for February and March before full rates resume on April 1, 2027.
Finance Canada attributes a saving of more than $5 on a typical 50-litre gasoline fill to the full suspension. However, retail fuel prices include other components, and the tax relief does not guarantee a matching reduction at the pump.
Official Government Sources
- Finance Canada: Legislation passes to extend federal fuel excise tax relief
- Finance Canada: Extension of fuel excise tax relief on gasoline, diesel and aviation fuels
- Finance Canada: Introduction of Bill C-38
- Finance Canada: Fuel excise tax draft legislation materials
- Ministère des Finances Canada : source officielle en français
This article provides general information based on official Canadian government sources. Government programs, amounts, eligibility rules and deadlines can change. Check the official sources linked above for information specific to your situation.