Oct 30, 2026
Every time you fill up right now, you pay 10 cents a litre less in federal tax on gasoline than you did last winter. That break has an expiry date, and Ottawa’s next big chance to change it arrives Nov. 5. That’s the day when federal Finance Minister François-Philippe Champagne tables the 2026 Federal Budget.
But events leading up to this year’s budget aren’t very forgiving — or positive. The budget lands two days after the U.S. midterm elections and a week after the Bank of Canada’s first rate hike in three years. Add to this a federal deficit that’s moving closer to $60 billion, and there’s cause for concern about that kind of relief — if any — the federal government can offer everyday Canadians.
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For those watching their own budgets, this budget day is a good reminder to pay attention to what’s already locked in, what could change and money moves to consider.
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What happens to the fuel tax break?
Ottawa suspended the federal fuel excise tax on April 20, 2026 — saving drivers 10 cents a litre on gasoline and 4 cents on diesel. Then again in September, the federal government extended the federal fuel excise tax suspension — setting a deadline of Jan. 31, 2027 for this temporary tax pause, according to Department of Finance Canada. After this deadline, the tax should return to fuel purchases, but not fully. From Feb. 1, 2027 to March 31, 2027, drivers will pay half the tax — 5 cents a litre on gas and 2 cents on diesel. Full rates come back on April 1, 2027.
The total cost to Ottawa for this relief? About $5.3 billion in uncollected tax revenue for the 2026-27 fiscal year.
When asked why the break wasn’t permanent, Finance Minister Champagne explained that the government needs to “see the state of the world” first.
What does this tax break mean for Canadians? Let’s assume a driver fills a 68-litre tank — the size of a minivan — once a week. The full tax break is worth about $6.80 per fill-up, or roughly $354 per year. For commuters, rural households and small businesses, this tax break can mean real cash savings in their annual budget.
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Will the budget change your RRSP, TFSA or FHSA?
There are rumours that the federal government is considering increasing the contribution limits for a number of registered savings accounts. In particular, the House of Commons finance committee appears to be considering a broad review of the nation’s overall personal finance tax-system, along with targeted tax credits. According to a summary of this pre-budget report, by accounting firm KPMG, credits being considered include a home improvement tax credit and a renters’ tax credit.
So where does that leave the contribution limits for the most popular tax-advantaged savings accounts, the Registered Retirement Savings Plan (RRSP), the Tax-Free Savings Account (TFSA) and the First-Home Savings Account (FHSA)? At this point in time, there appears to be no intention of adjusting these limits or the calculations used to establish contribution limits. As such, the current, established contribution limits for these accounts, according to the Canada Revenue Agency (CRA), is as follows:
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- TFSA: The 2026 Tax-Free Savings Account (TFSA) limit is currently set at $7,000, but there’s a good chance this will increase to $7,500 based on contribution limits tied to inflation.
- RRSP: Each year, your new RRSP room is the lesser of 18% of their previous year’s earned income or the annual dollar limit. The annual dollar limit for 2026 is $33,810 and for 2027 it’s $35,390.
- FHSA: Since its launch on April 1, 2023, the FHSA annual contribution limit has been capped at $8,000 per year, for a lifetime maximum of $40,000.
For Canadians, the 2026 Federal Budget will have little to offer in terms of updates on current tax-advantaged savings accounts. Even the potential increase for the 2027 TFSA contribution isn’t announced until late November, well after the federal budget details are released.
The bigger issue, for Canadians, is timing. In particular, investors sitting on equity positions with large losses or gains; if this is you, pay attention to any tax incentives introduced by the 2026 Federal Budget as this may impact tax-sensitive transactions.
What’s on the table for housing?
Canadians looking to buy property — or already holding property — will be particularly interested in any housing-related relief offered by the federal budget.
The good news is that one of the biggest measures is already in place: The first-time home buyers’ GST/HST rebate helps Canadians save as much as $50,000 when they purchase a qualified newly built or substantially renovated home. The full rebate applies to homes valued up to $1 million and phases out to zero at $1.5 million.
Another measure that impacts homeowners and prospective home buyers — and also not part of the budget — are interest rates. About a week before the federal budget announcement, the Bank of Canada raised its policy rate to 2.5% — its first hike since July 2023. For borrowers this means the cost of credit increased on variable rate loans, including mortgages and home equity lines of credit (HELOCs).
But there may be some hope. According to the KPMG summary, the federal finance committee has a wish list that includes a permanent, refundable home improvement tax credit for renovations that boost energy efficiency, climate resilience, accessibility or housing quality. Another suggestion is a refundable, income-tested federal renters’ tax credit.
Keep in mind, recommendations aren’t promises.
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What should Canadians expect on budget day?
The Parliamentary Budget Officer (PBO), Parliament’s independent fiscal watchdog, projects a $63.3-billion deficit for 2026-27 and expects the deficit to peak at $70.2 billion the following year. At the same time, economic growth forecasts are being downgraded with 0.9% projected by the end of 2026 and 1.5% for 2027.
Given the anemic economic growth, higher borrowing costs and persistent inflation, Canadians probably shouldn’t anticipate sweeping relief in this year’s federal budget.
Instead, expect targeted measures rather than broad tax cuts.
What to do this federal budget season
Regardless of what is introduced in this year’s federal budget, Canadians can focus on maximizing their own budgetary savings — and plan for anticipated higher costs.
To help, here’s a list of budget considerations for the remainder of 2026 and going into 2027:
- Already planning a tax-sensitive move, such as selling investments with large capital gains? Ask a tax professional about completing it before Nov. 5 or consider how a taxation change could impact this planned investment strategy.
- If you have a variable-rate mortgage or HELOC, reach out to your lender to confirm how the Oct. 28 hike changes your payment.
- Buying a new home for the first time? Confirm your GST rebate eligibility before you sign.
- Check your RRSP, TFSA and FHSA room in CRA My Account and, where possible, maximize contributions for 2026.
- Budget for higher pump prices starting Feb. 1, 2027, and again on April 1, 2027, unless the budget says otherwise
The Nov. 5 federal budget may help a little, but for most Canadians the best strategy to weather current economic conditions is to create and execute a financial plan. Remember to read the fine print once the budget lands, because effective dates matter more than headlines.
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Romana King, Senior Editor at Money.ca, also writes for various North American publications and the RKHomeowner blog. Her book, House Poor No More, is an Amazon bestseller and five-time award winner, including the 2022 New York CPA Society's Excellence in Financial Journalism (EFJ) Book Award.
