OTTAWA — PM Mark Carney's government is increasing the luxury tax threshold for EVs and hydrogen-powered vehicles to $150k, even though federal stats show only 349 hydrogen passenger vehicles are on Canadian roads.Finance Minister Francois-Philippe Champagne announced on Thursday that the federal government is proposing to raise the price threshold at which the federal luxury tax applies from $100k to $150k for all-electric and hydrogen-powered vehicles.The measure would come into effect on November 13, subject to subsequent approval by Parliament.Gasoline-powered vehicles and the conventional hybrids will still be subject to the existing $100k threshold.As per Transport Canada's EV dashboard, there were only 349 hydrogen fuel cell passenger vehicles in Canada as of July 1st, 2026. That's about 0.0013% of the nearly 27 million light-duty vehicles in the country.Canada had 798,499 fully battery-electric vehicles and another 335,935 plug-in vehicles on the roads during that period..Hydrogen vehicles were such a tiny part of the Canadian market that Transport Canada's dashboard simply rounds their market share to 0.0%.The numbers come as Ottawa continues its support of hydrogen technology as part of the wider move to zero-emission transportation.Hydrogen-powered vehicles work via fuel cells, which generate electricity from hydrogen and produce no tailpipe greenhouse gas emissions.However, their uptake in Canada has been hampered by limited vehicle availability and a lack of refueling infrastructure.As of June 2026, Transport Canada reported only nine publicly accessible hydrogen refueling stations in the country (seven in BC and two in Ontario).That's compared with over 40,000 public EV chargers across the country..The federal government is funding the rollout of 31 hydrogen refueling stations, with most of those projects either not yet open or not publicly accessible.The Mirai is one of the very few hydrogen passenger vehicles available in Canada.Even with the very limited uptake of hydrogen vehicles, Champagne pointed to the higher luxury car tax threshold as a way to account for the significantly higher purchase price of zero-emission vehicles."With Budget 2026 we're expanding our electricity system, cutting emissions and unlocking new investment in clean tech," said Champagne in a statement."By updating this measure to reflect the current state of the vehicle market, we are enabling the transition to a cleaner, more competitive economy."Under the current rules, the luxury tax applies to passenger vehicles over $100k..The tax is the lower of 10% of the vehicle's full taxable value or 20% of the amount above the relevant threshold.For instance, a qualifying $125k electric or hydrogen vehicle would currently be subject to the $5k federal luxury tax.Under the proposed changes, that tax would be wiped out.A qualifying $150k vehicle would likewise be exempt from the $10k luxury tax, which would otherwise be payable under the existing threshold.The change has no impact on the federal sales tax or the applicable provincial tax.The DF didn't provide an estimate of how much revenue Ottawa expects to forgo under the measure, or how many hydrogen vehicles are expected to benefit.The announcement also comes as Budget 2026 commits another $587M over five years (beginning in 2027-28) to install over 55,000 EV chargers across the country..Another $45m over five years has been proposed for R&D in the area of charging infrastructure.The Government says the investments will underpin its wider effort to increase the use of electric vehicles and reduce transport emissions.While battery electric vehicles have certainly gained a foothold on the Canadian road, hydrogen passenger vehicles are still a very small part of the market.The proposed luxury tax change would be applied equally to qualifying electric and hydrogen vehicles (despite the vast difference in their uptake in Canada).
