The federal gas tax holiday was supposed to end this week — it just got extended to 2027

The federal fuel excise tax — 10 cents a litre on gasoline, 4 cents on diesel — was set to zero on April 20, 2026 as a temporary measure, with a hard stop on Labour Day. On September 8, the day it was due to come back, Ottawa extended the pause instead.

The new schedule

The suspension now runs in three stages:

• Now through January 31, 2027: federal excise stays at 0 cents on gasoline and diesel.
• February 1 to March 31, 2027: half rate — 5 cents a litre on gasoline, 2 cents on diesel.
• April 1, 2027: full rate returns — 10 cents gasoline, 4 cents diesel.

Ottawa puts the cost of the extension at about $2.9 billion, bringing total 2026–27 fuel-tax relief to roughly $5.3 billion.

The excise tax is charged before sales tax, so the GST/HST is calculated on top of it. When 10 cents of excise comes off, the pump price drops by a bit more than 10 cents — which is why prices fell 11 cents on the first day of the pause in April.

What it's worth per litre, by province

The sales-tax stacking means the saving varies slightly by where you fill up:

• Ontario, New Brunswick, Nova Scotia, PEI, Newfoundland (HST provinces): about 11.3 to 11.5 cents a litre.
• Quebec (GST + QST): about 11.5 cents.
• Alberta, BC, Saskatchewan, Manitoba, territories (GST only): about 10.5 cents.

Provincial fuel taxes and carbon levies aren't touched by this — only the federal excise line.

What it's worth per year

A 50-litre fill saves roughly $5.50. For a typical driver, the annual figure depends on kilometres:

• 12,000 km a year in a car burning 8 L/100 km — about 960 litres — saves roughly $105 over a full year at the zero rate.
• 20,000 km a year in a pickup or SUV at 11 L/100 km — about 2,200 litres — saves roughly $240.
• A two-vehicle household in the second category is looking at close to $500 a year.

Those numbers are the full-year value. The remaining window is shorter: about five months at zero, then two months at half. From today through March 31, 2027, that same 20,000-km driver keeps roughly $120 in hand.

Why the timing matters more than the amount

The return is scheduled for April 1, 2027 — the same week most Canadians are finalizing their tax returns and a few weeks before the spring driving season. The step-up is 5 cents in February and another 5 cents in April, so the shock is spread, but it lands on top of whatever wholesale prices are doing at the time — and a scheduled 11-cent return can look like a price spike even though it's fully known in advance.

If you use the cost of living comparison to benchmark your household's transportation spending, remember the 2026 numbers reflect a tax holiday that most of 2027 won't have.

What to do with it

• Don't re-baseline your fuel budget on 2026 prices. Treat the pause as a temporary rebate, not a new normal — it's about $10 to $20 a month for most drivers, and it has an expiry date.
• If you drive for work, the CRA's per-kilometre allowance rates are set annually and don't move with the excise tax. Your reimbursement is the same; your actual cost is slightly lower until spring.
• Watch for a further extension. This is the second time the "hard" end date has moved. Budget 2026 is due this fall and it's the obvious place for another change either way.

The takeaway

The extension keeps roughly 11 cents a litre off the pump price for another five months, then half that for two more. For most households that's worth a few hundred dollars a year at best — real, but modest. The part worth planning around is the calendar: full federal fuel tax returns on April 1, 2027, and unless it gets extended again, that's the week your fill-up quietly costs $5 to $6 more.

Source: Housing, Infrastructure and Communities Canada, The Government of Canada extends the federal fuel excise tax relief, September 8, 2026, and Department of Finance, Temporarily suspending the federal fuel excise tax, April 2026. Per-litre and annual savings are illustrative estimates based on the statutory rates and provincial sales-tax rates.