On April 1, 2026, the federal government announced an additional two-year extension of the two per cent cap on the annual alcohol excise duty inflation adjustment, and of the 50 per cent reduction on excise duty rates for the first 15,000 hectolitres of beer brewed in Canada, effective April 1, 2026.
In Budget 2023, the government announced a temporary cap on the inflation adjustment for excise duties on beer, spirits, and wine at two per cent, for one year, as of April 1, 2023. The government first implemented the cap to provide tax relief for small businesses, given the Excise Act and the Excise Act, 2001 require alcohol excise duties to be automatically indexed to total Consumer Price Index (CPI) inflation at the beginning of each fiscal year (i.e., on April 1st). On March 9, 2024, the government announced that this cap would be extended for an additional two years (2024-25 and 2025-26).
The two per cent cap on the inflation adjustment for excise duties on beer, spirits, and wine would be extended for two additional years starting on April 1, 2026. The proposed capped excise duty rates on all alcoholic beverage products are presented in the table below.
| Rate for Fiscal Year 2025-26 | Rate for Fiscal Year 2026-27 (proposed 2% adjustment) | Rate for Fiscal Year 2027-28 (proposed 2% adjustment)5 | |
|---|---|---|---|
| Spirits2 | $13.840 | $14.117 | $14.399 |
| Wine3 | $0.730 | $0.745 | $0.760 |
| Beer4 | $36.95 | $37.69 | $38.44 |
1 No excise duty is imposed on alcoholic products containing not more than 0.5 per cent alcohol by volume. 2 Rates per litre of absolute ethyl alcohol. Reduced rates apply to spirits containing not more than 7 per cent alcohol by volume. 3 Rates per litre of wine. Reduced rates apply to wine containing not more than 7 per cent alcohol by volume. 4 Regular rates per hectolitre of beer. Reduced rates apply for the first 75,000 hectolitres of beer brewed in Canada each calendar year. 5 The adjustment for 2027-28 would be lower than the 2% cap if the inflationary adjustment, determined in accordance with the Excise Act and Excise Act, 2001, is lower than 2 per cent. |
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50 per cent Reduction in Excise Duty Rates for Breweries
On March 9, 2024, the government announced a temporary two-year 50 per cent reduction in excise duty rates on the first 15,000 hectolitres (hL) of beer brewed in Canada, effective April 1, 2024 (1 hL equals 100 L).
The government is proposing to extend this measure for an additional two years, effective April 1, 2026. This extension would continue to lower excise duties on all beer brewed in Canada below the 15,000 hL threshold, and would benefit all producers.
Canadian brewers benefit from lower excise duty rates on the first 75,000 hL of beer produced per year, which in fiscal year 2026-27 would have provided relief of up to $921,521 for each brewer. The proposed reduced rates would provide additional tax relief of up to $90,456 for each brewer in 2026-27.
The following table sets out the proposed excise duty relief for beer brewed in Canada.
| Production Volume (hL) | Reduced Rate Percentage | Proposed Fiscal Year 2026-27 Rates | Halving Reduced Rates up to 15,000hL for 2026-27 |
|---|---|---|---|
| 0 to 2,000 | -90% | $3.769 | $1.8845 (-95% rate) |
| 2,001 to 5,000 | -80% | $7.538 | $3.769 (-90% rate) |
| 5,001 to 15,000 | -60% | $15.076 | $7.538 (-80% rate) |
| 15,001 to 50,000 | -30% | $26.383 | Unchanged |
| 50,001 to 75,000 | -15% | $32.037 | |
| 75,0010 and above | Regular rate | $37.69 |
