Compliance
Fuel Tax Relief & Labour Mobility Deductions: What Canadian Workers Should Know
Amid rising costs, Canada introduced key tax changes in mid-2026 aimed at fuel excise tax suspension and broader deductions for mobile workers; understanding these can translate to real savings.
By NomadicTax Research Team • 5-8 min read • July 18, 2026
## Temporary Fuel Excise Tax Suspension
- Under **Bill C-30**, which received Royal Assent on **June 19, 2026**, the federal government temporarily set the excise tax rate on **gasoline, diesel, aviation fuel** and **unleaded aviation gasoline** to **0 ¢/liter** from **April 20, 2026 through September 7, 2026**. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
- Expected savings: about **10 cents per litre** on gasoline and **4 cents per litre** on diesel fuel. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
- Aimed at lowering prices at the pump, helping households with high transportation needs. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
## Enhanced Labour Mobility Deduction
- Also under Bill C-30, the **Labour Mobility Deduction** is enhanced:
* The **minimum distance threshold** has been lowered from **150 km** to **120 km**. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
* The **annual maximum deduction** is increased from **$4,000** to **$10,000**. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
- This helps tradespeople and others who regularly travel or relocate for work by reducing taxable income related to work-travel/moving. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
## Who Should Care & When It Takes Effect
- Workers with regular job-related travel or moves outside of usual commuter distances now have greater deduction amounts — may significantly reduce taxable income.
- The distance reduction benefits those whose work location is not routinely close but just outside the 120 km cutoff.
- Both changes came into effect with the enactment of Bill C-30 in mid-2026 — so file accordingly for the 2026 tax year. ([canada.ca](https://www.canada.ca/en/department-finance/news/2026/06/legislation-passes-to-implement-measures-from-the-spring-economic-update-2026.html?utm_source=openai))
## Examples
- Emily drives 130 km from home to job site daily and incurs lodging expenses: under the new rules, qualifies (since over 120 km threshold), and can claim up to **$10,000** in deducible expenses; previously limited to $4,000.
- Marco moves from City A to City B, 130 km apart, for a 10-week project: meeting the new entitlement; previously may have been ineligible unless over 150 km.
## Tips for Compliance
1. **Keep strong documentation**: travel logs, relocation expenses, travel distances, related receipts—these deductions require clear support.
2. **Understand eligible expenses**: lodging, meals (if allowed), travel, and other costs tied to mobility under CRA rules.
3. **Check thresholds** annually**: statutory changes like distance thresholds or allowable expenses may change—always verify current CRA guidance before preparing returns.
4. **Plan ahead**: big moves or extended job travel in 2026 may now yield greater tax relief; plan timing accordingly.
These two changes — fuel tax relief and enhanced deductions — offer concrete relief to Canadians grappling with high mobility and transportation costs. Use them wisely to improve after-tax cash flow.