The federal fuel excise tax suspension has been extended by enacted legislation, with a scheduled two-step restoration in early 2027.
The extension is now law
Canada's Department of Finance announced October 29 that Bill C-38, the Canadian Fuel Affordability Act, received Royal Assent. The legislation extends the temporary suspension of the federal fuel excise tax on gasoline, diesel and aviation fuels through January 31, 2027. This moves the previously announced policy from a government proposal into enacted law.
What drivers may save
Federal gasoline excise tax relief is 10 cents per litre while the suspension is in place, or $5 on 50 litres before considering any change in retail prices or taxes calculated on the price. Finance Canada estimates an additional $2.9 billion in relief from the extension and total fuel-tax savings of $5.3 billion in fiscal 2026–27. These are government projections, not household-specific guarantees.
Rates are due to return in stages
From February 1 to March 31, 2027, gasoline and unleaded aviation gasoline are scheduled to face five cents per litre in federal excise tax, half the standard rate. Diesel and aviation fuel are scheduled for two cents per litre. Full federal excise rates are due back April 1, 2027, unless legislation changes. Other fuel taxes and market-based pump prices are separate from this particular measure.
Why this affects more than motorists
The Finance Department says the extension is intended to ease costs for transport-intensive businesses, including food distribution, construction and delivery. However, a temporary tax suspension does not establish how much of the saving will reach the final price of any product, because wholesale fuel costs, supply, operating expenses and competition also influence pricing.
Sources & transparency
Department of Finance Canada — Bill C-38 Royal Assent, October 29Original CDN News coverage. Sources are linked for reference.
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