Carbon Tax Cancelled in Canada: What Changed and What It Means for You

The federal consumer carbon tax, officially the fuel charge, no longer applies. The CRA says the federal government stopped the fuel charge and the Canada Carbon Rebate for individuals on March 15, 2025, and regulations set every fuel charge rate to zero from April 1, 2025. The Canada Carbon Rebate was the quarterly payment that returned the charge to households. This page explains what changed, what stayed, and how the change affects a household. For the rebate’s final payment and past amounts, see the Canada Carbon Rebate page; current programs are in the benefits guide.

What the fuel charge cost

The fuel charge applied to fossil fuels and combustible waste in the provinces and territories that used the federal carbon pricing system, including Yukon and Nunavut. The last rates in force, from April 1, 2024 to March 31, 2025, were:

Source: CRA fuel charge rates. From April 1, 2025, all rates were set to zero.

For example, a car driven 20,000 km a year at 10 L/100 km uses 2,000 litres of gasoline; at the last rate, the fuel charge on that was about $352 a year. Pump prices also follow oil prices and retail margins, so the saving at the pump isn’t exactly the charge.

What ended and what stayed

The industrial system prices emissions from large industrial emitters, not the fuel households buy. Quebec runs its own cap-and-trade system, linked with California’s, which was never part of the federal fuel charge.

How it affects a household

Households lost two things at once: the charge on fuel and the rebate that offset it.

• Fuel costs: the charge was built into the price of gasoline, diesel, natural gas and propane. Households that drive a lot or heat with natural gas or propane saved the most.
• The rebate: the quarterly payment stopped. It was a fixed amount per household based on family size and province, whatever the household’s fuel use; the final amounts by province show what each family received.

So whether a household is better or worse off depends on how much fuel it used. A household that paid less in fuel charge than it received in rebates is now worse off, and one that paid more is better off. Urban renters who drive little are more likely to be in the first group; rural households with long drives and gas or propane heating in the second.

Taxes

The rebate was tax-free, including the final April 2025 payment. You don’t report it on your return, and nothing replaces it on future returns.

Related pages

• Canada Carbon Rebate: final payment and past amounts
• BC climate action tax credit (ended)
• Canada Groceries and Essentials Benefit
• Energy rebates by province
• Canada Greener Homes program
• Smart spending: consumer guides
• Government benefits guide for Canada