Ottawa extends federal fuel-tax suspension until January 2027

The federal government is extending its temporary suspension of excise taxes on gasoline, diesel and aviation fuel until January 31, 2027, delaying a tax increase that had been scheduled for after Labour Day. The measure removes 10 cents per litre from the federal tax on gasoline and four cents per litre from diesel, offering continued relief to motorists and businesses facing elevated fuel prices.

The taxes will return gradually following the extension. From February 1 through March 31, gasoline will be taxed at five cents per litre and diesel at two cents—half their normal rates. Full excise taxes of 10 cents per litre on gasoline and four cents on diesel are scheduled to return on April 1, 2027. Aviation-fuel taxes will follow a similar two-month phase-in.

Ottawa estimates the extension will cost the federal treasury an additional $2.9 billion, bringing the total value of fuel-tax relief during the 2026–27 fiscal year to approximately $5.3 billion. The suspension was introduced in April as fuel prices rose amid international conflict and energy-market disruption, with the government arguing that lower taxes would help drivers while reducing costs for trucking, agriculture, construction and other fuel-dependent industries. Actual prices at the pump will continue to fluctuate with oil prices, refining margins and local market conditions.