Carbon tax by province looks very different in 2026 than it did two years ago. Consumers no longer pay a carbon tax anywhere in Canada: the federal fuel charge ended April 1, 2025, and British Columbia and the Northwest Territories dropped their consumer carbon taxes the same day. What still applies is industrial carbon pricing on large emitters, which operates in every province and territory except Saskatchewan, either through the federal Output-Based Pricing System or a provincial equivalent.
What Ended for Consumers in 2025
The federal fuel charge under Part 1 of the Greenhouse Gas Pollution Pricing Act added a per-litre cost to gasoline, diesel, and natural gas for nearly seven years. In its final year, the charge reached 17.6 cents per litre on gasoline.1Canada.ca. Fuel Charge Rates On March 15, 2025, the federal government set all fuel charge rates to zero by regulation, effective April 1, 2025.2Canada Revenue Agency. FCN16 Removal of the Fuel Charge Bill C-4, the Making Life More Affordable for Canadians Act, received royal assent on March 12, 2026, formally repealing the fuel charge provisions while leaving industrial pricing intact.3Library of Parliament. Legislative Summary of Bill C-4
British Columbia cancelled its consumer carbon tax, originally established in 2008, by dropping the rate to zero on the same date. That took roughly 17 cents per litre off gasoline and about 15 cents per cubic metre off natural gas heating bills.4BC Gov News. B.C. Eliminates Carbon Tax The province’s Low Carbon Fuel Standard still adds costs to fuel (roughly 18 cents per litre for gasoline) as an embedded regulatory charge, not a carbon tax.
The Northwest Territories removed its carbon tax for all consumers on April 1, 2025, keeping the tax in place only for large emitters (currently the territory’s diamond mines).5Government of Northwest Territories. Carbon Tax The territorial government has said it will fully repeal its carbon tax legislation once broader federal amendments are complete.
Industrial Carbon Pricing by Province
Large industrial facilities still face a carbon price everywhere except Saskatchewan. The federal Output-Based Pricing System under Part 2 of the Greenhouse Gas Pollution Pricing Act was left untouched by Bill C-4 and continues to operate as a backstop wherever a province lacks an equivalent system.6Environment and Climate Change Canada. Output-Based Pricing System
The federal OBPS applies directly in:
- Prince Edward Island
- Manitoba
- Yukon
- Nunavut
Provinces and territories running their own industrial systems include:7Government of Canada. Carbon Pricing Systems Across Canada
- Alberta, under the Technology Innovation and Emissions Reduction (TIER) regulation, which applies to facilities emitting 100,000 tonnes or more of CO₂ equivalent annually, with smaller facilities able to opt in under specific conditions.8Government of Alberta. Technology Innovation and Emissions Reduction Regulation
- British Columbia, through a provincial output-based system for industry.
- New Brunswick, Newfoundland and Labrador, and Nova Scotia, each with their own industrial systems.
- Ontario, under the Emissions Performance Standards program.
- Quebec, through a cap-and-trade system linked with California’s since 2014. Auction revenue flows into the province’s Electrification and Climate Change Fund rather than household rebates.9Ministère de l’Environnement. The Carbon Market, a Green Economy Growth Tool10Ministère de l’Environnement. Auction Proceeds Allocated to the Electrification and Climate Change Fund
- Northwest Territories, for large emitters only.
Saskatchewan is the outlier. The province paused its industrial carbon pricing system effective April 1, 2025, and as of mid-2026 it remains paused.7Government of Canada. Carbon Pricing Systems Across Canada Whether the federal government imposes the OBPS or negotiates a restart is an open question.
Provincial systems must meet or exceed the federal stringency benchmark. If a province weakens its program, the federal OBPS can step in.
The 2026 Price and the Path to 2030
The original federal benchmark called for the industrial carbon price to rise by $15 per tonne each year, reaching $170 per tonne in 2030. On May 15, 2026, the federal government issued a revised trajectory that significantly reduces the later-year targets:11Government of Canada. Update to the Pan-Canadian Approach to Carbon Pollution Pricing 2023-2030
- 2026: $95 per tonne
- 2027: $100 per tonne
- 2028: $100 per tonne
- 2029: $100 per tonne
- 2030: $115 per tonne
The 2030 endpoint drops from $170 to $115 per tonne, and the steady annual escalation is replaced by a plateau in the middle years. Provinces remain free to exceed the federal minimum.
What Happened to the Rebates
The Canada Carbon Rebate, previously the Climate Action Incentive Payment, was a quarterly tax-free payment that returned federal fuel charge revenue to households in backstop provinces, with a 20% top-up for residents of small and rural communities.12Canada Revenue Agency. Canada Carbon Rebate for Individuals Because the fuel charge ended April 1, 2025, the rebate ended with it. The final household payment was issued in April 2025.
The Canada Carbon Rebate for Small Businesses (for Canadian-controlled private corporations with 499 or fewer employees in designated provinces) also ended, with 2024–2025 as its final payment year. Legislation passed in March 2026 made that rebate non-taxable for all fuel charge years.
British Columbia’s Climate Action Tax Credit, which sent quarterly payments to lower- and middle-income residents, was cancelled when the provincial carbon tax ended. The final credit payment went out in April 2025.4BC Gov News. B.C. Eliminates Carbon Tax
Quebec never sent household rebates from carbon pricing. Auction revenue from its cap-and-trade system continues to fund public transit, industrial decarbonization, and renewable energy projects.10Ministère de l’Environnement. Auction Proceeds Allocated to the Electrification and Climate Change Fund
Filing Obligations That Survived the Repeal
Removing the consumer fuel charge does not erase obligations from earlier periods. Businesses that were registered distributors or had fuel charge liabilities for any reporting period before April 1, 2025, must still file outstanding returns and pay any amounts owing.13Canada Revenue Agency. Report the Fuel Charge Registrants use Form B400; non-registrants use Form B401. Returns are due by the last day of the calendar month following the applicable reporting period.
Records supporting fuel charge returns must be kept for six years from the end of the last year to which they relate.13Canada Revenue Agency. Report the Fuel Charge The remaining provisions of Part 1 of the Act, along with its related schedules and regulations, are set to be formally repealed on April 1, 2035.3Library of Parliament. Legislative Summary of Bill C-4
Commercial heating oil customers who were charged the federal carbon tax before the November 2023 exemption took effect cannot apply retroactively and would need to contact the CRA directly about any rebate on previously incurred charges.