Alcohol tax in Ontario is not a single charge but a stack: the federal government collects an excise duty when the product is made or imported, Ontario adds its own basic tax, the LCBO applies a wholesale markup, and 13% HST is applied at the register. A refundable container deposit sits alongside these on the receipt. By the time a bottle of spirits reaches you, more than half of what you pay can be taxes and government markups.
Federal Excise Duty
The first layer hits at the point of production or importation. Under the Excise Act and the Excise Act, 2001, manufacturers and importers remit duty to the Canada Revenue Agency before product ever enters provincial distribution. Rates adjust every April 1 based on the Consumer Price Index.
As of April 1, 2026, the rates for spirits and wine are:
- Spirits above 7% ABV: $14.117 per litre of absolute ethyl alcohol
- Spirits at 7% ABV or below: $0.358 per litre
- Wine above 7% ABV: $0.745 per litre
- Wine between 1.2% and 7% ABV: $0.358 per litre
- Wine at 1.2% ABV or below: $0.022 per litre
Products at 0.5% ABV or less are exempt from excise duty entirely.1Canada Revenue Agency. Adjusted Rates of Excise Duty on Spirits and Wine Effective April 1, 2026
Beer is charged by volume rather than alcohol content. The regular federal rate is $37.69 per hectolitre for beer above 2.5% ABV, $18.85 per hectolitre for beer between 1.2% and 2.5%, and $3.128 per hectolitre at 1.2% or below.2Canada Revenue Agency. Adjusted Rates of Excise Duty on Beer Effective April 1, 2026 The annual inflation adjustment on all alcohol excise duties has been capped at 2% for the two years starting April 1, 2026.3Department of Finance Canada. Government Extends Excise Duty Relief, Provides Direct Support to Canadian Breweries, Distilleries and Wine Makers
Ontario’s Basic Tax on Beer
Once beer enters the Ontario market, the Liquor Tax Act adds a provincial basic tax on top of the federal duty. The rate depends on whether the brewer is classified as a microbrewer and whether the beer is sold as draft or in packages. As of April 1, 2026:
- Non-draft beer from large brewers: $1.18 per litre
- Draft beer from large brewers: $0.90 per litre
- Non-draft beer from microbrewers: $0.46 per litre
- Draft beer from microbrewers: $0.36 per litre
- Draft beer brewed and sold at Ontario brew pubs: $0.3341 per litre
These rates were restructured under Ontario’s 2026 budget, and indexation has been paused, so they hold steady until at least March 2027.4Government of Ontario. Notice to Ontario Alcohol Manufacturers: April 1, 2026 Tax Changes
Ontario’s Basic Tax on Wine and Spirits
Wine and spirits are taxed differently. Ontario applies an ad valorem basic tax, meaning it is calculated as a percentage of the retail price rather than a flat rate per litre. The percentage depends on the product type, where it is sold, and whether the wine was made in Ontario. Ontario-produced wines sold at winery retail stores generally get more favourable treatment than imported wines.
Spirits also carry an ad valorem basic tax. This is a relatively recent change. In the past, the LCBO’s markup on spirits functioned as the primary revenue mechanism, and there was no separate spirits basic tax in the same form. A distinct spirits basic tax was introduced as sales expanded beyond LCBO stores into grocery and convenience retail.
LCBO Wholesale Markups
The Liquor Control Board of Ontario adds its own markup on top of excise duties and provincial taxes. For most of the LCBO’s history, retail prices were set using internal formulas that could push the shelf price of spirits to more than double the landed cost. That is where much of the sticker shock comes from when Ontario prices are compared to other jurisdictions.
As of April 1, 2026, the LCBO shifted to a cost-plus wholesale pricing model. The formula is: landed cost + wholesale markup + cost of service differential (if applicable) + container deposit + HST. It applies uniformly to all wholesale customers, including bars, restaurants, grocery stores, convenience stores, The Beer Store, and LCBO retail outlets.5Doing Business with LCBO. Trade FAQs Wholesale Pricing April 1, 2026
Under the new model, wholesale markups for wine, spirits, cider, and ready-to-drink products are calculated as a percentage of landed cost and vary by ABV tier. Beer markups remain volumetric, differing by producer size and by packaged versus draft. The LCBO removed minimum retail pricing for spirits as of April 2025, giving retailers more flexibility to set final shelf prices.6Doing Business with LCBO. An Update on Wholesale Pricing and Other Annual Pricing Updates An additional cost of service differential applies to imported wine, cider, spirits, and ready-to-drink products, varying by country of origin, and is built into the wholesale price.
HST at the Register
After all the duties, provincial taxes, and LCBO markups are folded into the price, Ontario’s 13% Harmonized Sales Tax is applied at checkout. The HST combines the 5% federal GST with Ontario’s 8% provincial component into a single charge. Because it applies to the all-in price, you are effectively paying sales tax on top of taxes already embedded in the product cost. That compounding is one of the reasons alcohol taxation feels disproportionately heavy compared to other consumer goods.
Retailers remit the HST to the Canada Revenue Agency. The 5% federal portion flows to the national treasury; the 8% provincial portion is returned to Ontario under the Comprehensive Integrated Tax Coordination Agreement.7Government of Ontario. Tax Collection / Coordination Agreements
Container Deposits
Your receipt will also show a container deposit alongside the taxes. Unlike the charges above, this deposit is fully refundable. The amounts are:
- Glass containers 630 mL or smaller: $0.10
- Glass containers over 630 mL: $0.20
- Aluminum and steel containers 1 litre or smaller: $0.10
- Aluminum and steel containers over 1 litre: $0.20
You get the full deposit back when you return empty containers to The Beer Store or another authorized collection point.8helloLCBO. Ontario Deposit Return Program (ODRP) The deposit is not technically a tax since it is recoverable, but it adds to what you hand over at checkout.
Bringing Alcohol Back Into Canada
If you have been outside Canada for 48 hours or more, you can bring back a limited amount of alcohol without paying federal duty or provincial taxes. You can only claim one of the following categories per trip, not a combination:
- Wine: up to 1.5 litres (roughly two standard 750 mL bottles)
- Spirits: up to 1.14 litres (one standard 40 oz bottle)
- Beer: up to 8.5 litres (roughly 24 cans at 355 mL each)
You cannot mix categories or pool allowances between family members.9Canada Border Services Agency. Travellers – Paying Duty and Taxes Anything beyond the limit is assessed federal excise duty, the applicable provincial markup, and HST. Provincial liquor boards set the markup rates on excess alcohol, and CBSA collects them on behalf of Ontario at the border.10Canada Border Services Agency. Non-Commercial Provincial Tax Collection Programs
Brewing or Distilling at Home
You can legally brew beer at home in Ontario without paying excise duty, provided it is for personal or family consumption and you do not sell it or use it commercially. The federal Excise Act exempts home-brewed beer from the duties that apply to commercial production, and the equipment used for personal brewing does not require a licence.11Justice Laws Website. Excise Act, RSC 1985, c E-14 Selling or commercially using home-brewed beer is a criminal offence with the same penalties as brewing without a licence.
Homemade wine follows similar rules and is generally permitted for personal consumption. Distilling spirits at home is a different matter. The Excise Act, 2001 prohibits anyone from producing spirits without a federal spirits licence, and no personal-use exemption exists.12Lexum. Excise Act, 2001, SC 2002, c 22 Home distillation is illegal in Canada regardless of quantity or intent.