Canada's federal excise tax on diesel, normally 4 cents per liter, stays at 0 cents per liter through January 31, 2027. It is set to return at 2 cents per liter from February 1 to March 31, 2027, and at the full 4 cents from April 1, 2027. Finance Canada announced the extension on September 2, 2026. The Canada Revenue Agency (CRA) describes the rates after September 7, 2026 as proposed, because the bill that enacts them, C-38, is still in the Senate as of October 27, 2026.
For shippers and carriers on Canada lanes, the federal tax is one line in the pump price that fuel surcharge tables are indexed to. The dates matter because two steps land in the first quarter of 2027.
What are the rates and dates?
| Period | Federal excise on diesel | Status (CRA notice ETSL82) |
|---|---|---|
| Before April 20, 2026 | 4¢/L (regular rate) | Regular rate |
| April 20 to September 7, 2026 | 0¢/L | In effect |
| September 8, 2026 to January 31, 2027 | 0¢/L | Proposed (Bill C-38) |
| February 1 to March 31, 2027 | 2¢/L | Proposed (Bill C-38) |
| From April 1, 2027 | 4¢/L | Regular rate returns |
Gasoline follows the same pattern from its 10¢/L regular rate: 0¢/L through January 31, 2027, 5¢/L in February and March, and 10¢/L from April 1, 2027. Aviation fuel other than aviation gasoline matches diesel.
Is the extension law yet?
Not as of October 27, 2026. Bill C-38, the Canadian Fuel Affordability Act, amends the Excise Tax Act to extend the relief. Parliament's LEGISinfo shows it completed second reading in the Senate on October 27, 2026, with third reading and Royal Assent still ahead. CRA's notice ETSL82 labels the rates after September 7, 2026 as proposed and warns that "any commentary in this notice should not be taken as a statement by the Canada Revenue Agency (CRA) that the proposed amendments will be enacted in their current form." Fuel importers claim the relief on the CARM Commercial Accounting Declaration with excise exemption code F00, per CBSA Customs Notice 26-11 (updated September 3, 2026).
What does it mean for fuel surcharges on Canada freight?
- Surcharges indexed to Canadian retail diesel already reflect the 0¢ rate. Natural Resources Canada publishes weekly retail diesel prices for 45 cities and a Canada average, a common index for Canadian fuel surcharge tables. The tax step-ups on February 1 and April 1, 2027 will show up in that series as they reach pump prices, and the surcharge will move with it. There is nothing to adjust by hand in an indexed table.
- Fixed or contract fuel assumptions need a date check. If a contract baked a flat diesel assumption into an all-in rate during the suspension, the February and April steps push the carrier's cost up by 2¢/L and then 4¢/L before any market move. Build the dates into Q1 2027 pricing.
- Provincial fuel taxes still apply. The suspension is federal only. Nothing in the Finance Canada measure changes a provincial fuel tax.
- Cross-border loads priced in U.S. dollars are a different index. A U.S.-to-Canada or Canada-to-U.S. load priced off the U.S. side often uses the U.S. Energy Information Administration weekly diesel price, which does not include Canadian excise. Decide in the rate confirmation which index and currency apply. The same question comes up on Mexico lanes; see the Mexico fuel surcharge page.
What to watch
- Royal Assent for Bill C-38. Until then CRA treats the 0¢ rate after September 7, 2026 as proposed.
- Whether the government extends the relief again before January 31, 2027. The April 2026 suspension has already been extended once.
- The NRCan weekly series in the first two weeks of February and April 2027, when the steps should appear.
Running Canada freight? See the U.S.-Canada load board. Brokers post loads and get rates, carriers find loads, and shippers can see where Canada rates sit at cargado.com.
Frequently asked questions
Is Canada's federal diesel excise tax suspended?
Yes, at 0¢/L since April 20, 2026. Finance Canada announced on September 2, 2026 that the suspension runs through January 31, 2027, then 2¢/L from February 1 to March 31, 2027, and the full 4¢/L from April 1, 2027. CRA treats the rates after September 7, 2026 as proposed until Bill C-38 is enacted.
Does the suspension cover provincial fuel taxes?
No. It is the federal excise tax only. Provincial fuel taxes still apply.
What do fuel importers enter on CARM?
Excise exemption code F00 on the Commercial Accounting Declaration, per CBSA Customs Notice 26-11.
Which diesel index should a Canada fuel surcharge use?
A common index is Natural Resources Canada's weekly retail diesel prices (45 cities plus a Canada average). Loads priced in U.S. dollars often use the U.S. EIA weekly diesel price. State the index and currency in the rate confirmation.
When will the tax come back?
Half rate (2¢/L) from February 1, 2027 and full rate (4¢/L) from April 1, 2027, if Bill C-38 passes as written.
Sources
- Department of Finance Canada, Sept 2, 2026: The Government of Canada extends the federal fuel excise tax relief on gasoline, diesel and aviation fuels
- Canada Revenue Agency, Excise Taxes and Special Levies Notice ETSL82: Proposed temporary rate reductions of the excise tax on certain types of fuel
- Parliament of Canada, LEGISinfo: Bill C-38, Canadian Fuel Affordability Act
- CBSA Customs Notice 26-11: Temporary suspension of the federal fuel excise tax
- Natural Resources Canada: Diesel fuel prices
