Understanding U.S. vs. Canadian Gas Taxes

Updated November 3, 2025

Gas prices aren’t just about oil costs and exchange rates — taxes play a big role too. Both the U.S. and Canada tax fuel, but in very different ways. Understanding this can help explain why prices sometimes seem higher on one side of the border.

Canada’s Fuel Taxes

In Canada, gas taxes include:

• Federal excise tax (10¢/L)
• Provincial excise tax (varies by province)
• Carbon tax (varies, currently increasing annually)
• GST or HST (5–15% depending on province)

This means Canadian gas prices often look higher — but much of that is tax rather than the raw cost of fuel.

U.S. Fuel Taxes

In the U.S., gas taxes include:

• Federal excise tax (~18.4¢ per gallon)
• State fuel taxes (average 30–35¢ per gallon, but varies widely)

Since sales taxes are generally not added at the pump, U.S. gas prices often look lower even when before-tax costs are similar.

Why This Matters for Travelers

If you’re comparing pump prices, taxes are a big reason Canada often looks more expensive. When converting with our Gas Price Converter, keep in mind that the differences aren’t just about exchange rates — taxes are built in too.

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