Fuel Tax Relief & Labour Mobility Deductions: What Canadian Workers Should Know

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)
• Expected savings: about 10 cents per litre on gasoline and 4 cents per litre on diesel fuel. (canada.ca)
• Aimed at lowering prices at the pump, helping households with high transportation needs. (canada.ca)

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)
  • The annual maximum deduction is increased from $4,000 to $10,000. (canada.ca)
• This helps tradespeople and others who regularly travel or relocate for work by reducing taxable income related to work-travel/moving. (canada.ca)

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)

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.