CRA Mileage Rate 2026: 73¢/km and Who Can Claim It
The 2026 CRA mileage rate is 73¢/km for the first 5,000 km, then 67¢. Here's who the rate applies to, who can't use it, and what to claim instead.
EveryLastMile
For 2026, the rate is 73¢ per kilometre for the first 5,000 business kilometres, then 67¢ for every kilometre after that. In Yukon, the Northwest Territories, and Nunavut, it’s 77¢ and 71¢. The Department of Finance Canada announced these figures on January 14, 2026, effective January 1.
That’s the number you came for. Now the part almost every other page gets wrong.
This rate is a ceiling on what an employer can pay an employee tax-free for using their own vehicle. It is not a deduction method. If you are self-employed — a sole proprietor, a partner, a freelancer, a gig driver — you cannot multiply your business kilometres by 73¢ and put that on your return. Canada has no per-kilometre election for business vehicle expenses. You deduct a percentage of what the vehicle actually cost you.
Getting this backwards is the single most expensive mistake in Canadian vehicle tax content, and it is currently live on several well-ranked pages. This guide covers both paths: what the rate means if you’re an employee or an employer, and what you claim instead if you work for yourself.
Key takeaways
- The 2026 prescribed rate is 73¢/km for the first 5,000 business kilometres and 67¢/km after that; 77¢ and 71¢ in the three territories.
- The rate governs tax-free employer allowances, not self-employed deductions. It’s set in section 7306 of the Income Tax Regulations.
- Self-employed filers deduct actual vehicle costs × business-use percentage on line 9281 of Form T2125. There is no per-kilometre shortcut.
- A flat monthly car allowance is taxable, no matter the amount. Only allowances based solely on business kilometres driven can be tax-free.
- There is no separate Ontario, Alberta, or BC rate. The figure is federal.
- Every path — employee, employer, self-employed — requires the same four log entries per trip: date, destination, purpose, kilometres.
What is the CRA mileage rate for 2026?
| Where you drive | First 5,000 business km | Each additional km |
|---|---|---|
| The ten provinces | 73¢ | 67¢ |
| Yukon, Northwest Territories, Nunavut | 77¢ | 71¢ |
Both tiers rose one cent from 2025. The territorial supplement stayed at 4¢.
One rate, several names. Everyone calls this the CRA mileage rate. Officially it’s the reasonable automobile allowance rate, prescribed under section 7306 of the Income Tax Regulations. You’ll also see it as the CRA per-km rate, the CRA km rate, the automobile allowance rate, the standard mileage rate for Canada, and the prescribed or reasonable per-kilometre rate. These all mean the same figure. The CRA sets it; the Department of Finance announces it.
Two other 2026 figures come from the same announcement and matter for employer-provided vehicles:
| Item | 2026 rate |
|---|---|
| Operating expense benefit, general | 34¢/km |
| Operating expense benefit, automobile sales and leasing employees | 31¢/km |
Those two are unchanged from 2025. They value the personal-use benefit when the employer owns the car — a different calculation from the allowance rate, and one that trips up anyone searching for “the CRA rate” without specifying which one.
Does the 5,000 km threshold reset every year?
Yes. It counts business kilometres only, it applies per person per calendar year, and it resets January 1. Personal driving never enters the count.
Why are there two tiers?
The first tranche absorbs the fixed costs of owning a vehicle at all — insurance, registration, the portion of depreciation that happens because you owned the car for a year rather than because you drove it. Spread those over a small number of kilometres and the per-kilometre cost is high. Past 5,000 km, most of the fixed cost is already covered, and what’s left is fuel, tires, and wear. Hence the six-cent step down.
Who can actually claim the CRA mileage rate?
This table is the whole article in six lines.
| Your situation | What the 73¢ rate does for you | What you actually claim |
|---|---|---|
| Employee receiving a per-km allowance | Sets the ceiling for a tax-free allowance | Nothing on your return — the allowance stays off your T4 |
| Employee with no allowance, or a taxable one | Nothing directly | Actual expenses × business-use %, on Form T777, with a signed T2200 |
| Self-employed / sole proprietor / partner | Nothing | Actual expenses × business-use %, line 9281 of Form T2125 |
| Employer paying an allowance | Caps your deductible allowance under Reg. 7306 | The allowance you paid, up to the prescribed rate |
| Employer providing the vehicle | Not the right rate — use the 34¢ operating benefit | Standby charge and operating benefit on the employee's T4 |
| Claiming medical or moving travel | Not the right rate — different rates entirely | The CRA's per-province travel rates (see below) |
If you fall in row three, the rest of this section is the one that matters to you.
Can self-employed Canadians use a per-kilometre rate?
No. The CRA’s guidance on motor vehicle expenses describes exactly one calculation for business use of a vehicle: total the expenses you incurred to run the vehicle, then deduct the share that relates to earning business income. The share is business kilometres divided by total kilometres.
Deductible costs on line 9281 include licence and registration fees, fuel and oil, electricity for zero-emission vehicles, insurance, interest on money borrowed to buy the vehicle, maintenance and repairs, and leasing costs. Capital cost allowance goes separately on line 9936. Parking fees for business and supplementary business insurance are fully deductible without proration.
Partners claim their personal-vehicle costs on line 9943 instead, through Part 5 of the T2125.
Nowhere in that structure is there a box where you write “kilometres × 73¢.” The number does not appear on the form.
When is a car allowance tax-free for an employee?
Under the CRA’s administrative policy, an allowance for using your own vehicle is not taxable when all three of these are true:
- The allowance is based only on business kilometres actually driven.
- The per-kilometre rate is reasonable — the Reg. 7306 prescribed rate is the CRA’s benchmark for reasonable.
- Your employer did not also reimburse you for expenses covering the same use of the vehicle. (Reimbursements for supplementary business insurance, tolls, and ferry charges are carved out, provided the allowance was set without reference to them.)
Miss any one and the whole allowance becomes employment income, reported in Box 14 of your T4.
The CRA is explicit about the failure modes:
- A flat monthly allowance is taxable. $600 a month regardless of distance is not based on kilometres driven. The amount doesn’t matter; the structure does.
- Combining a flat amount and a per-km amount for the same driving is taxable. The CRA treats the two as one allowance, and one allowance that isn’t based solely on kilometres is taxable in full.
- A rate that is too high or too low can be unreasonable. Paying well above the prescribed rate invites the CRA to treat the allowance as unreasonable, which makes it taxable.
There is one genuine exception worth knowing: a flat rate for travel inside an employment district plus a reasonable per-km rate for travel outside it are assessed separately, because they don’t cover the same use of the vehicle. The per-km portion can stay tax-free while the flat portion is taxed.
If your allowance ends up taxable, you may be able to deduct your actual vehicle costs on Form T777 — but only with a signed Form T2200 from your employer, and only with the receipts and log to support it.
Worked example: Priya, an employee in Hamilton
Priya is a field service technician. In 2026 she drives 14,200 business kilometres out of 21,000 total. Her actual vehicle costs for the year come to $9,800.
Route A — her employer pays the prescribed per-km rate:
| Line | Amount |
|---|---|
| First 5,000 km × 73¢ | $3,650 |
| Remaining 9,200 km × 67¢ | $6,164 |
| Total allowance | $9,814 |
| Amount on her T4 | $0 |
| Income tax, CPP, EI on it | $0 |
Net to Priya: $9,814.
Route B — her employer pays a flat $650 a month instead:
| Line | Amount |
|---|---|
| Allowance received (12 × $650) | $7,800 |
| Taxable? | Yes — flat rate, not based on kilometres |
| Income tax at 29.65% combined Ontario marginal | −$2,313 |
| CPP at 5.95% | −$464 |
| Business-use share: 14,200 ÷ 21,000 | 67.6% |
| T777 deduction: $9,800 × 67.6% | $6,627 |
| Tax recovered on the deduction, at 29.65% | +$1,965 |
| Net to Priya | ≈ $6,988 |
The flat allowance costs her roughly $2,826, before EI premiums, and buys her a year of receipt-keeping plus a T2200 she has to ask her employer to sign. Same driving. Different structure.
Employers: the per-km structure is cheaper for you too. A tax-free allowance carries no employer CPP or EI, and it’s deductible up to the prescribed rate under Reg. 7306.
Worked example: Marc, a self-employed electrician in Ottawa
In 2026 Marc drives 18,400 business kilometres out of 26,000 total. Net business income before the vehicle deduction is about $79,000.
Step 1 — business-use percentage. 18,400 ÷ 26,000 = 70.8%.
Step 2 — total vehicle operating costs.
| Expense | 2026 |
|---|---|
| Fuel and oil | $3,240 |
| Insurance | $1,860 |
| Maintenance and repairs | $1,150 |
| Licence and registration | $145 |
| Interest on the car loan | $2,050 |
| Total | $8,445 |
The interest is fully deductible here. The 2026 cap is the lesser of actual interest and $350 per month, and Marc’s $2,050 is well under it.
Step 3 — the deductible portion. $8,445 × 70.8% = $5,979, entered on line 9281 of his T2125.
Step 4 — what it’s worth. Marc’s income lands in the 29.65% combined federal-Ontario bracket for 2026.
| Line | Amount |
|---|---|
| Income tax saved: $5,979 × 29.65% | $1,773 |
| CPP saved: $5,979 × 11.90% (self-employed rate) | $711 gross |
| Net CPP saving, allowing for the portion of CPP that's itself deductible | ≈ $600 |
| Combined cash saving | ≈ $2,373 |
| Net value per business kilometre | ≈ 12.9¢ |
Capital cost allowance sits on top of this, on line 9936, and so do GST/HST input tax credits if Marc is registered. Both are walked through in our T2125 vehicle expenses guide.
What the shortcut would have “given” him. At 73¢/67¢, 18,400 km works out to $12,628. Marc is not entitled to that figure and it doesn’t belong anywhere on his return. Claiming it would overstate his deduction by more than double.
It cuts the other way too. A tradesperson running a $60,000 truck at 90% business use, with a full CCA claim, will often deduct more than the per-km figure would have produced. That’s the point: actual expenses aren’t a worse deal than the rate, they’re a different calculation. Some years you’re ahead. The rate simply isn’t yours to use.
Is the CRA “simplified method” a per-kilometre deduction?
No — and the name causes real damage. Search “CRA simplified method vehicle” and you’ll find a flat per-kilometre rate that varies by province: 62.0¢ in Ontario for 2025, 56.5¢ in Alberta, and a different figure for every other province and territory. It looks exactly like the per-kilometre deduction that self-employed people wish they had.
It isn’t. Those rates apply to medical travel, moving expenses, and the northern residents deductions. They cannot be used for business vehicle expenses by anyone — self-employed or employee. The CRA publishes them separately, on a separate schedule, and they land in early the following year rather than in January.
The terminology collision is almost certainly where the “simplified per-kilometre method for self-employed” myth comes from. Two different simplified methods exist in Canadian tax:
| “Simplified” | What it actually is | Who uses it |
|---|---|---|
| Simplified travel method | Flat per-province cents/km, no receipts | Medical, moving, northern residents deductions |
| Simplified logbook method | Three-month sample projected from a base year | Business vehicle expenses — and it simplifies the log, not the rate |
The second one is genuinely useful and covered next.
What records does the CRA require for a mileage claim?
Same four fields, whatever your situation.
The full logbook
For each business trip:
- Date
- Destination
- Purpose of the trip
- Kilometres driven
Plus the odometer reading at the start and end of each fiscal period. If you change vehicles mid-period, record the date and the odometer at the change. Using more than one vehicle for business? Separate log and separate expense records for each, calculated separately.
The CRA’s own words: the best evidence to support the use of a vehicle is an accurate logbook maintained for the entire year.
Both business and personal kilometres matter, because the deduction turns on the ratio.
The simplified (base-year) logbook
Keep a full logbook for one complete 12-month base year. In later years you may use a three-month sample period to project annual business use, provided the result stays within 10% of the base year and the base year is still representative of how you use the vehicle.
The CRA’s formula:
(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use
Worked through: quarterly business use of 52 / 46 / 39 / 67 in the base year, 49% for the year. A later-year sample for April through June shows 51%; those same months in the base year showed 46%. So (51% ÷ 46%) × 49% = 54%, which the CRA would accept absent contradictory evidence.
If the calculated figure moves more than 10% from the base year, the base year is no longer a reliable indicator. The sample then supports only its own three months, the rest of the year needs actual records, and you should establish a new 12-month base year.
The catch nobody mentions. To use a three-month sample later, you need month-by-month odometer readings across the whole base year, so the same three months can be isolated for comparison. Manually, almost nobody does this. Which means most people who intend to use the simplified method in year two never actually can.
How long do I keep the records?
Six years from the end of the tax year they relate to. A base-year logbook has a longer life: keep it for six years from the end of the last tax year in which it was used to establish business use.
What gets a vehicle claim reduced or denied?
The CRA doesn’t need to prove you didn’t drive. Under the record-keeping rules, the burden runs the other way — you support the claim, or the claim doesn’t stand.
The recurring failures are unglamorous:
- A total-kilometre figure with no trip detail. “22,000 business km” is a conclusion, not a record. Without date, destination, and purpose per trip, there’s nothing to review.
- No purpose recorded. Date and distance without a business reason leaves the reviewer no way to distinguish a client site visit from a trip to the same plaza for groceries.
- A log reconstructed in April. Rebuilding a year of driving from a calendar, credit card statements, and location history produces a document that is internally inconsistent under any scrutiny, and it is exactly what a review is designed to catch.
- No odometer readings. Without start and end readings for the fiscal period, the denominator of the business-use ratio is unverifiable — and so is the ratio.
- Claiming the commute. Home to a regular place of work is personal driving, for employees and self-employed alike. Where an employee reports to several regular workplaces in a day, the CRA treats home-to-first-stop and last-stop-to-home as personal, and the driving between them as business.
Is there an Ontario mileage rate? Or Alberta, or BC?
No. The prescribed per-kilometre figure is set federally by the Department of Finance and applies in all ten provinces identically. There is no Ontario rate, no Alberta rate, and no BC rate.
What does change by province is the tax value of a deduction, because combined marginal rates differ, and the sales tax treatment, because HST, GST-plus-PST, and QST behave differently for input credits.
The one real geographic split is the territories: Yukon, Northwest Territories, and Nunavut get 4¢ more per kilometre on both tiers, reflecting genuinely higher operating costs in the North. Three territories — not provinces, and not “Northern Canada” loosely defined.
Quebec
Quebec filers file twice. The federal T2125 goes to the CRA; Form TP-80-V, Business or Professional Income and Expenses, goes to Revenu Québec, with motor vehicle expenses on line 220 and capital cost allowance on line 240. Revenu Québec’s guide IN-155-V, Business and Professional Income, is the reference.
The important point: the per-kilometre allowance figure is federal. Revenu Québec does not publish a competing business kilometre rate that changes the arithmetic, and it applies the same business-use-percentage logic to self-employed vehicle expenses. If you’ve read that a Quebec sole proprietor can deduct “Revenu Québec’s per-kilometre rate,” that’s wrong on both counts — the rate isn’t Revenu Québec’s, and it isn’t a deduction.
What are the other 2026 vehicle limits?
These come from the same January 14, 2026 announcement and apply to self-employed filers and corporations, not just employers.
| Limit | 2026 | Applies to |
|---|---|---|
| Class 10.1 passenger vehicle CCA ceiling | $39,000 before tax | Vehicles, new or used, acquired on or after January 1, 2026 |
| Class 54 zero-emission passenger vehicle CCA ceiling | $61,000 before tax | Vehicles, new or used, acquired on or after January 1, 2026 |
| Deductible monthly lease cost | $1,100 before tax | Leases entered into on or after January 1, 2026 |
| Maximum monthly interest deduction | $350 | Loans entered into on or after January 1, 2026 |
The acquisition-date qualifier is not decoration. If you bought your car in 2024, you’re working with the 2024 ceiling, not $39,000. The Class 10.1 ceiling rose from $38,000; the other three are unchanged from 2025.
Historical CRA mileage rates
| Year | First 5,000 km (provinces) | Additional km (provinces) | First 5,000 km (territories) | Additional km (territories) |
|---|---|---|---|---|
| 2026 | 73¢ | 67¢ | 77¢ | 71¢ |
| 2025 | 72¢ | 66¢ | 76¢ | 70¢ |
| 2024 | 70¢ | 64¢ | 74¢ | 68¢ |
| 2023 | 68¢ | 62¢ | 72¢ | 66¢ |
| 2022 | 61¢ | 55¢ | 65¢ | 59¢ |
| 2021 | 59¢ | 53¢ | 63¢ | 57¢ |
| 2020 | 59¢ | 53¢ | 63¢ | 57¢ |
| 2019 | 58¢ | 52¢ | 62¢ | 56¢ |
| 2018 | 55¢ | 49¢ | 59¢ | 53¢ |
| 2017 | 54¢ | 48¢ | 58¢ | 52¢ |
| 2016 | 54¢ | 48¢ | 58¢ | 52¢ |
| 2015 | 55¢ | 49¢ | 59¢ | 53¢ |
Filing a prior year? Use the rate for the year the driving happened, not the year you file. If you’re filing your 2025 return in 2026, you use the 2025 rate of 72¢/66¢ — not this year’s 73¢/67¢. The same applies to a reassessment or an adjustment request reaching further back: a 2022 amendment uses the 2022 rate of 61¢/55¢.
Note the flat years. The rate did not move between 2020 and 2021 (59¢/53¢ both years), and 2016 and 2017 were also identical at 54¢/48¢. It fell from 55¢ to 54¢ between 2015 and 2016 — the only decrease in the table. There is no automatic indexing formula; the Department of Finance sets the figure annually.
When does the CRA update the mileage rate?
Once a year. The Department of Finance announces the following year’s automobile deduction limits and expense benefit rates in a single news release, historically between mid-December and mid-January. The 2026 figures came on January 14, 2026, effective retroactively to January 1.
That gap is why so many published pages are wrong. A page written in December about “2026 rates” that was never revisited in January still shows 2025 figures. As of this writing, several established mileage-tracking sites still display 72¢/66¢ on pages titled 2026, and others show 76¢/70¢ for the territories. Check the announcement date on any page quoting a rate, and check it against the Finance Canada release.
We review this page every January, within days of the announcement.
How automatic tracking solves the actual problem
The Canadian version of this problem has three structural features that manual logging handles badly.
The deduction is a ratio, not a total. Business kilometres alone tell you nothing. You need total kilometres too, which means personal trips have to be captured as well — the trips you have the least motivation to write down.
The four required fields have to be contemporaneous. Date, destination, purpose, distance. Reconstructing three of the four from memory in April is the pattern that fails review.
The simplified method has a hidden prerequisite. Using a three-month sample in year two requires month-end odometer readings maintained across the full base year. That’s a discipline nobody sustains with a glovebox notebook — and it’s the reason to start tracking in the middle of a year rather than resolving to do better next January.
EveryLastMile, an iOS mileage tracking app, is built around these three. Drive detection runs on-device using your iPhone’s motion and location sensors, so trips are captured whether or not you remembered to press anything. Each drive is classified business or personal with a swipe, which produces the ratio rather than just the numerator. Every trip carries the date, route, distance, and business purpose, and a CSV export hands the whole year to your accountant in one file.
The processing happens on your phone. Your location history isn’t uploaded to a server, which for a record you’re required to keep for six years is worth something on its own.
Frequently asked questions
What is the CRA mileage rate for 2026?
73¢ per kilometre for the first 5,000 business kilometres and 67¢ per kilometre after that, in the provinces. In Yukon, the Northwest Territories, and Nunavut it's 77¢ and 71¢. Announced by the Department of Finance Canada on January 14, 2026, effective January 1, 2026.
Can I claim 73¢ per kilometre if I'm self-employed?
No. The prescribed rate limits what an employer can pay an employee tax-free. Sole proprietors and partners deduct actual vehicle costs multiplied by business-use percentage, on line 9281 of Form T2125. There is no per-kilometre election for business vehicle expenses in Canada.
Is there a separate CRA mileage rate for Ontario, Alberta, or BC?
No. The rate is federal and identical across all ten provinces. Only the three territories differ, at 4¢ higher on both tiers.
Is mileage reimbursement taxable in Canada?
A per-kilometre allowance is not taxable if it's based only on business kilometres driven, the rate is reasonable, and your employer didn't also reimburse you for the same vehicle use. Fail any of those and the full amount goes into employment income on your T4.
Is a flat monthly car allowance taxable?
Yes. A fixed amount paid regardless of distance is not based on kilometres driven, so it's taxable in full. Combining a flat amount with a per-kilometre amount for the same driving is also taxable — the CRA treats the combination as one allowance.
Does an employer have to pay the prescribed rate?
No. The prescribed rate is the CRA's benchmark for reasonable, and the ceiling on what the employer can deduct. An employer may pay less. But a rate that is materially too low or too high may not be considered reasonable, and an unreasonable allowance is taxable.
What was the CRA mileage rate for 2025?
72¢ for the first 5,000 kilometres and 66¢ after that, with 76¢ and 70¢ in the territories. Use 2025 rates for the 2025 return you file in spring 2026 — the rate follows the year the driving happened, not the year you file.
What is the CRA gas mileage rate?
There isn't one — it's a common misphrasing of the automobile allowance rate. The 73¢/67¢ figures cover the whole cost of running a vehicle, not fuel alone: insurance, depreciation, maintenance, registration, and fuel together.
What records does the CRA require to support a kilometre claim?
For each business trip: date, destination, purpose, and kilometres driven. Plus the odometer reading at the start and end of each fiscal period, and the dates and readings if you change vehicles mid-period.
Can I deduct driving from home to work in Canada?
No. Travel between home and a regular place of work is personal driving. Where an employee reports to more than one regular workplace in a day, home-to-first-stop and last-stop-to-home are personal, and travel between the workplaces is business driving. Travel from home to a point of call — a client site rather than a regular workplace — is generally business driving.
How long do I have to keep my logbook?
Six years from the end of the tax year the records relate to. A base-year logbook used to support the simplified method must be kept for six years from the end of the last tax year in which it was used to establish business use.
What is the simplified (base-year) logbook method?
After keeping a full logbook for one complete 12-month base year, you may use a three-month sample in later years to project annual business use, as long as the result is within 10% of the base year and the base year still represents normal use. The formula is (sample period % ÷ base year same-period %) × base year annual %.
Is the CRA simplified method a per-kilometre deduction for business?
No, and the name causes real confusion. The simplified travel method uses flat per-province cents-per-kilometre rates and applies only to medical travel, moving expenses, and northern residents deductions. It cannot be used for business vehicle expenses by anyone.
What is the CRA mileage rate for medical travel?
A different rate, set per province and territory, and published on a separate schedule from the business allowance rate. For 2025 it was 62.0¢ in Ontario and 56.5¢ in Alberta, with a separate figure for every other province and territory. Rates for a given year are typically released early in the following year.
What are the 2026 automobile deduction limits?
Class 10.1 CCA ceiling $39,000 before tax; Class 54 zero-emission ceiling $61,000; deductible lease cost $1,100 a month; maximum interest deduction $350 a month. The CCA ceilings apply to vehicles acquired on or after January 1, 2026, and the lease and interest limits to arrangements entered into on or after that date.