CRA Publishes 2026 Adjusted Rates of Excise Duty and Cigarette Inventory Tax Taking Effect April 1

April 1, 2026, marks the annual CPI-based adjustment to excise duty rates for beer, spirits, wine, and tobacco products, along with a separate cigarette inventory tax.

The Canada Revenue Agency (CRA) has published four excise duty notices confirming the 2026 adjusted rates of excise duty on beer, spirits and wine, and tobacco products, as well as the cigarette inventory tax.

The excise duty rate changes reflect the annual April 1 adjustment tied to the Consumer Price Index (CPI), with updated rates becoming payable on beer, spirits, wine, and tobacco on or after April 1, 2026.

Separately, the cigarette inventory tax applies to duty-paid and special-duty-paid cigarettes held in inventory at 12:01 a.m. on April 1, 2026.

Adjusted rates of excise duty on beer

Beer excise duty rates will be adjusted on April 1, 2026, and the updated rates apply to excise duty that becomes payable on or after that date.

The 2026 adjusted regular rates on beer are:

• Beer containing not more than 1.2% AEA by volume: $3.128 per hectolitre
• Beer containing more than 1.2% but not more than 2.5% AEA by volume: $18.85 per hectolitre
• Beer containing more than 2.5% AEA by volume: $37.69 per hectolitre

Reduced rates are available to eligible domestic brewers and apply to the first 75,000 hectolitres brewed in Canada each calendar year by a licensed brewer or any person related to or associated with that brewer, with tiered rates based on annual production increases.

Non-alcoholic beer (not more than 0.5% absolute ethyl alcohol by volume) is not subject to excise duty.

The 2026 excise duty rates on beer reflect the end of the temporary duty relief, which included a reduced 50% rate on the first 15,000 hectolitres for two years starting April 1, 2024.

Adjusted rates of excise duty on spirits and wine

Spirits and wine excise rates will also be adjusted for excise duty that becomes payable on or after April 1.

The 2026 adjusted rates on spirits are:

• Spirits containing not more than 7% AEA by volume: $0.358 per litre of spirits
• Spirits containing more than 7% AEA by volume: $14.117 per litre of absolute ethyl alcohol

The 2026 adjusted rates on wine are:

• Wine containing not more than 1.2% AEA by volume: $0.022 per litre of wine
• Wine containing more than 1.2% but not more than 7% AEA by volume: $0.358 per litre of wine
• Wine containing more than 7% AEA by volume: $0.745 per litre of wine

Non-alcoholic spirits and wine (not more than 0.5% absolute ethyl alcohol by volume) are not subject to excise duty.

Adjusted rates of excise duty on tobacco

Similarly, tobacco excise duty rates will be adjusted on April 1, 2026, and the updated rates apply to excise duty that becomes payable on or after that date.

This annual adjustment does not apply to the excise duty rate on raw leaf tobacco, which remains at $1.572 per kilogram. It also does not apply to the special duty rates on stamped tobacco products.

The adjusted rates on stamped tobacco products are:

• Cigarettes: $0.97299 per 5 cigarettes (or fraction of 5) contained in any package
• Tobacco sticks: $0.19460 per tobacco stick
• Manufactured tobacco (other than cigarettes and tobacco sticks): $12.16227 per 50 grams (or fraction of 50 grams) in a package
• Cigars: $42.35331 per 1,000 cigars

An additional duty on cigars applies at a rate that is the greater of:

• $0.15224, or
• the amount that is 88% of:
  • The sale price, in the case of cigars manufactured in Canada
  • The duty-paid value, in the case of imported cigars

Special duty rates apply for:

• Unstamped imported manufactured tobacco delivered to a duty-free shop
• Traveller's tobacco
  
• Unstamped tobacco products manufactured in Canada and exported

Cigarette inventory tax

The cigarette inventory tax will apply to cigarettes held in inventory at 12:01 a.m. on April 1, 2026, for cigarettes that will be for sale in the ordinary course of business.

The cigarette inventory tax rate as of April 1, 2026, is $0.00382 per cigarette ($0.76400 per carton of 200 cigarettes).

It applies to:

• Duty-paid cigarettes (cigarettes on which excise duty has been paid, as indicated by DUTY PAID CANADA DROIT ACQUITTÉ on the affixed tobacco excise stamp)
• Imported unstamped cigarettes on which special duty was paid by a duty-free shop

Inventory must be determined at the beginning of the day on April 1, and it must be calculated in a fair and reasonable manner (which may include a physical count) and supported by records.

A separate retail establishment holding 30,000 or fewer cigarettes (150 cartons of 200) is not required to report or pay the tax.

Where a business is liable, the CRA requires Form B273 and payment no later than May 31, 2026, to be filed online through My Business Account or by mail on paper.

At Cole International, we offer trade consulting and customs brokerage services to help Canadian businesses navigate evolving trade regulations and requirements.

For more information about these rate adjustments and their impact on your imports, reach out to one of our trade professionals.