Fuel tax relief could continue for Canadians into 2027 under legislation introduced by Finance Minister François-Philippe Champagne.
Bill C-38, called the Canadian Fuel Affordability Act, would extend the temporary suspension of federal excise taxes on gasoline, diesel and aviation fuels until January 31, 2027.
The bill was introduced in the House of Commons on September 21, 2026, and announced by the Department of Finance Canada on September 22, 2026.
It is not yet law under the proposed legislation.
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What Bill C-38 would change
Under the proposed measure, the federal excise tax rate on covered fuels would remain at zero until and including January 31, 2027.
From February 1 through March 31, 2027, the regular federal excise tax rates would be cut in half.
| Fuel | Regular rate | Rate from February 1 to March 31, 2027 |
|---|---|---|
| Gasoline and unleaded aviation gasoline | 10 cents per litre | 5 cents per litre |
| Leaded aviation gasoline | 11 cents per litre | 5.5 cents per litre |
| Diesel and other aviation fuel | 4 cents per litre | 2 cents per litre |
The full federal rates would return on April 1, 2027, if the legislation passes as proposed.
How much drivers could save
The Finance Department says the continued full suspension would save more than $5 on a typical 50-litre gasoline fill-up.
That figure reflects the 10-cent-per-litre federal excise tax on gasoline.
The actual price at a particular station can still vary because pump prices also reflect crude oil costs, refining, transportation, regional taxes and retailer pricing.
Once the half-rate period begins on February 1, 2027, the federal portion of the saving on a 50-litre gasoline fill-up would fall to $2.50 compared with the regular federal tax rate.
The proposal would also reduce costs for businesses that rely heavily on fuel, including trucking, agriculture, construction, food distribution, delivery and aviation.
Why the government introduced the extension
The federal government said global instability and supply disruptions in the Middle East have contributed to higher energy costs and increased pressure on households and businesses.
Finance officials said extending the relief is intended to lower transportation costs and ease pressure across supply chains, rather than provide a separate payment or rebate to households.
The proposed extension is expected to provide an additional $2.9 billion in fuel tax relief and bring the estimated total relief for Canadians to $5.3 billion in 2026-27.
How the current fuel tax relief began
The first temporary suspension took effect on April 20, 2026, after the federal government set the applicable excise tax rates at zero for certain gasoline, diesel and aviation fuels.
The original measure was scheduled to end on September 7, 2026.
The federal government says the initial suspension reduced the gasoline excise tax by 10 cents per litre and the diesel excise tax by 4 cents per litre, while separate aviation-fuel rates also applied.
What Canadians should watch next
Because Bill C-38 is legislation, the proposed dates and rates depend on the parliamentary process and Royal Assent.
Until Parliament approves the bill and it receives Royal Assent, Canadians should treat the extension as proposed rather than guaranteed.
The Canada Revenue Agency’s technical notice describes the planned zero-rate period through January 31, 2027, the half-rate period from February 1 to March 31, 2027, and the return to regular rates on April 1, 2027.
The legislation concerns the federal excise tax only.
Provincial fuel taxes and other charges are separate and would not automatically be removed by Bill C-38.
Frequently Asked Questions
What is Bill C-38?
Bill C-38 is the proposed Canadian Fuel Affordability Act, which would extend temporary federal fuel excise tax relief into 2027.
How long would the federal fuel tax be suspended?
The proposed zero-rate suspension would continue until and including January 31, 2027.
What happens to fuel taxes after January 31, 2027?
Federal excise tax rates would be reduced by 50% from February 1 through March 31, 2027, before returning to regular levels on April 1, 2027.
How much could a typical gasoline fill-up save?
The government says the full suspension saves more than $5 on a typical 50-litre gasoline fill-up. The saving would be about $2.50 during the proposed half-rate period.
Is the fuel tax extension already law?
No. Bill C-38 has been introduced, but the proposed extension still depends on parliamentary approval and Royal Assent.
Fact-Checked: Key dates, fuel rates, estimated savings and the status of Bill C-38 were checked against Department of Finance Canada, Canada Revenue Agency and federal legislative information.
Disclaimer: The proposed dates and rates could change until Parliament completes the legislative process and the bill receives Royal Assent.