# CRA Mileage Reimbursement Calculator (2026)

> Work out the most an employer can pay an employee per business kilometre, tax-free, under section 7306 of the Income Tax Regulations. Interactive calculator at https://everylastmile.app/ca/mileage-reimbursement-calculator

## What this figure is — and is not

The per-kilometre rate below is a **tax-free reimbursement ceiling**: the most an **employer** may pay an **employee** for business use of the employee's own vehicle without the allowance becoming taxable income.

It is **not** a deduction method. Canada has no per-kilometre deduction for sole proprietors or partners. A self-employed filer deducts actual vehicle costs multiplied by a business-use percentage on **Form T2125, line 9281** (capital cost allowance on line 9936). Applying the 73¢ figure to a self-employed return overstates the claim.

## 2026 rates

- Provinces: **73¢** per kilometre for the first 5,000 business kilometres, **67¢** for each kilometre after.
- Yukon, Northwest Territories, Nunavut: **77¢** and **71¢** — a constant 4¢ supplement on both tiers.
- Confirmed by the Department of Finance Canada on 14 January 2026, effective 1 January 2026.

The business rate does **not** vary by province. Only the three territories differ.

## The formula

Section 7306 builds the amount from three pieces:

    base cents × all business kilometres
    + 6¢ × the lesser of 5,000 and those kilometres
    + 4¢ × kilometres driven in Yukon, NT or Nunavut

In practice: `allowance = min(km, 5000) × tier1 + max(km − 5000, 0) × tier2`

Worked example — 2026, Ontario, 7,000 business kilometres:

    5,000 × $0.73 = $3,650.00
    2,000 × $0.67 = $1,340.00
    Total          = $4,990.00

## The 5,000 km threshold

- Per employee, per calendar year. It attaches to the individual, not to a vehicle.
- Business kilometres only. Commuting between home and work never counts.
- Resets 1 January. Part-year employment still gets the full band for the year.
- Two vehicles, one band — section 7306 says "one or more automobiles".
- Two employers, two bands — each employment relationship is assessed on its own.

## When the allowance is tax-free

All three CRA conditions must hold:

1. The allowance is based **only** on business kilometres driven in the year.
2. The per-kilometre rate is **reasonable** (the section 7306 rate is the benchmark).
3. The employer did **not also reimburse** expenses covering the same use of the vehicle.

Carve-outs: an employer may separately reimburse supplementary business insurance, toll charges and ferry charges without tainting the allowance.

The trade-off for a reasonable, tax-free allowance is that the employee **cannot also deduct** vehicle expenses for the same driving.

| Arrangement | Treatment | Why |
| --- | --- | --- |
| Flat monthly car allowance | Taxable | Not kilometre-based. T4 Box 14, itemised under Code 40. |
| Flat amount plus per-km for the same driving | All taxable | The entire allowance, even if the per-km part is reasonable. |
| Rate materially above or below prescribed | At risk | Can taint the whole allowance; a different rate may still be reasonable on the facts. |
| Flat inside an employment district, per-km outside it | Assessed separately | Different uses of the vehicle. |
| Reasonable per-kilometre allowance | Not taxable | Not reported on the T4 at all — no box, no code. |

## If the allowance is too low, or taxable

An employee cannot claim the difference at a per-kilometre rate. The only route is actual expenses:

1. Get **Form T2200** (Declaration of Conditions of Employment) signed by the employer. No T2200, no claim.
2. Total actual motor-vehicle expenses, then apportion by employment-use percentage from the kilometre log.
3. Claim on **Form T777**, line 22900. Any tax-free reimbursement received reduces the claim. Where the allowance was unreasonably low, the employee may instead include it in income and deduct the actual amounts.

## Employer side

- **Deduction cap** — paragraph 18(1)(r) limits the employer's deduction to the section 7306 amount. Any excess is not deductible and may make the allowance taxable to the employee.
- **Deemed GST/HST input tax credit** — the tax fraction of a reasonable allowance paid for taxable-supply activities. Ontario example: $1,080 × 13/113 = $124.25. If the allowance is not reasonable, the credit is denied.
- **Records** — keep the employee's kilometre log (date, destination, purpose, distance) plus documentation of the rate and payments, for six years.

| Fraction | Tax | Where it applies |
| --- | --- | --- |
| 13/113 | 13% HST | Ontario |
| 15/115 | 15% HST | New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island |
| 5/105 | 5% GST | Alberta, British Columbia, Manitoba, Saskatchewan, Quebec, Yukon, NWT, Nunavut |
| 9.975/109.975 | 9.975% QST | Quebec — input tax refund, on top of the 5/105 GST credit |

Where an allowance covers travel in more than one participating province, the Excise Tax Act determines which fraction applies — it is not automatically the employer's head-office province. See CRA GST/HST Memorandum 9.3.

## Quebec

Revenu Québec applies the same prescribed rate and the same substantive rules. A reasonable allowance is not reported on the RL-1 at all; an unreasonable one goes in boxes A, G, I and L. An employee who finds the allowance unreasonably low may include it in income and deduct actual eligible expenses on line 207 of the TP-1.

## Historical rates (provincial tiers, cents per kilometre)

| Tax year | First 5,000 km | After 5,000 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¢ |

## Rates that are confused with this one

These answer different questions and **cannot** be used for business vehicle expenses.

- **Simplified-method rates** (medical, moving, northern residents travel) — these *do* vary by province and territory, are set per tax year, and apply based on where the travel began. Meals: $23 per meal, to a maximum of $69 per day (sales tax included) per person, for 2025.
- **Operating-expense benefit rate** (subsection 7305.1) — 34¢/km for 2026 (31¢ for those employed principally in selling or leasing automobiles). Values the personal use of an employer-provided vehicle.
- **NJC / Treasury Board kilometric rates** — federal government travel only, reviewed quarterly, varying by province and territory. Not a private-sector benchmark.

| Province or territory | Simplified 2025 | Simplified 2024 |
| --- | --- | --- |
| Alberta | 56.5¢ | 54.5¢ |
| British Columbia | 59.5¢ | 57.5¢ |
| Manitoba | 56.0¢ | 54.5¢ |
| New Brunswick | 59.5¢ | 58.5¢ |
| Newfoundland and Labrador | 61.5¢ | 60.5¢ |
| Nova Scotia | 59.5¢ | 59.5¢ |
| Ontario | 62.0¢ | 60.5¢ |
| Prince Edward Island | 58.5¢ | 57.5¢ |
| Quebec | 60.5¢ | 58.0¢ |
| Saskatchewan | 55.5¢ | 55.0¢ |
| Northwest Territories | 70.0¢ | 70.0¢ |
| Nunavut | 70.5¢ | 70.5¢ |
| Yukon | 70.5¢ | 71.5¢ |

## Also announced for 2026

- **$39,000** — Class 10.1 capital cost ceiling for passenger vehicles acquired on or after 1 January 2026, up from $38,000
- **$61,000** — Class 54 zero-emission passenger vehicle ceiling — unchanged
- **$1,100** — Monthly deductible lease cost ceiling — unchanged
- **$350** — Monthly interest deduction limit on vehicle loans — unchanged
- **34¢** — Operating-expense benefit rate for an employer-provided vehicle — held, not raised (31¢ if employed principally in selling or leasing automobiles)

## Frequently asked questions

### What is the CRA mileage rate for 2026?

73¢ per kilometre for the first 5,000 business kilometres and 67¢ for each kilometre after that, in all ten provinces. In Yukon, the Northwest Territories and Nunavut it is 77¢ and 71¢. The Department of Finance Canada confirmed the 2026 figures on 14 January 2026.

### Is the CRA mileage rate different in BC, Alberta, Ontario or Manitoba?

No. One national rate covers every province — it does not change from British Columbia to Ontario to Nova Scotia. Only the three territories differ, by 4¢ on each tier. Your province still matters for the employer's GST/HST input tax credit fraction.

### Why do the territories have a higher mileage rate?

Section 7306 of the Income Tax Regulations adds 4¢ for every kilometre driven in Yukon, the Northwest Territories or Nunavut, on top of both tiers. That supplement has been a constant 4¢ for more than a decade.

### How does the 5,000 km threshold work?

It is per employee, per calendar year, counts business kilometres only, and resets on 1 January. It attaches to the person rather than the vehicle — section 7306 refers to “one or more automobiles”, so using two cars for one employer still gets one 5,000 km band.

### Can a self-employed person use the CRA mileage rate?

No. Canada has no per-kilometre deduction for sole proprietors or partners. You deduct actual vehicle costs multiplied by your business-use percentage on Form T2125, line 9281, with capital cost allowance on line 9936. Using the 73¢ figure on your return would overstate the claim.

### Is my car allowance taxable?

Not if all three CRA conditions hold: the allowance is based only on business kilometres driven, the per-kilometre rate is reasonable, and your employer does not also reimburse you for expenses covering the same use of the vehicle. Fail any one of the three and the whole allowance is taxable. The trade-off for a tax-free allowance is that you cannot also deduct vehicle expenses for the same driving.

### What happens if my employer pays more than the CRA mileage rate?

A rate that is unreasonably high can make the entire allowance taxable — reported in T4 Box 14 and itemised under Code 40. Code 40 is informational only: the amount is already inside Box 14, so it is not taxed twice. The employer also cannot deduct the portion above the prescribed amount, under paragraph 18(1)(r). A higher rate can still be reasonable on the facts, but the prescribed rate is the CRA's benchmark.

### My employer pays less than the CRA rate — can I claim the difference?

There is no per-kilometre difference to claim; no employee can deduct a per-kilometre amount. If the allowance is unreasonably low you may include it in income and deduct your actual eligible motor-vehicle expenses on Form T777 (line 22900), but only if your employer signs Form T2200.

### Do I need a Form T2200 to claim vehicle expenses as an employee?

Yes. Without a signed T2200 — the Declaration of Conditions of Employment — there is no employment-expense claim on line 22900. Ask payroll for it before you file, not after.

### Is a flat monthly car allowance taxable?

Always. A flat monthly amount is not based on kilometres, so it fails the first CRA condition however generous it is, and the full amount is included in employment income — T4 Box 14, itemised under Code 40. Switching to a per-kilometre allowance at or under the prescribed rate makes it tax-free.

### Can I get both a per-kilometre allowance and reimbursement for gas?

Not for the same driving — that double coverage makes the whole allowance taxable. Supplementary business insurance, toll charges and ferry charges are the carve-outs: an employer can reimburse those separately without tainting a kilometre-based allowance.

### How do I claim mileage for medical or moving travel?

Those use the CRA's simplified-method rates, which are a different set entirely. They do vary by province and territory, they are set per tax year, and they apply based on where the travel began. They cannot be used for business vehicle expenses.

### Can my employer claim a GST/HST input tax credit on mileage?

Yes — a deemed input tax credit equal to the tax fraction of a reasonable allowance paid for taxable-supply activities: 13/113 in Ontario, 15/115 in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island, and 5/105 elsewhere. If the allowance is not reasonable for income-tax purposes, the credit is denied.

### Does Quebec use the same mileage rate?

Yes. Revenu Québec applies the same prescribed per-kilometre rate and the same substantive rules. A reasonable allowance is not reported on the RL-1 at all; an unreasonable one goes in boxes A, G, I and L. Quebec employers can also claim the QST input tax refund at 9.975/109.975 alongside the GST credit.

### What were the CRA mileage rates in previous years?

Every year back to 2015 is listed on this page, and the year selector prices your kilometres at any of them — useful when you are reconstructing a prior year for a reassessment. The territorial supplement was 4¢ per tier throughout that window.

### Is commuting from home to work claimable?

No. Travel between home and your regular place of work is personal driving every time, and it never counts toward business kilometres or the 5,000 km band. Classify it as commuting and keep it out of the business total.

### What records do I need to keep for a CRA mileage claim?

Date, destination, purpose and distance for every business trip, plus documentation of the rate paid and the payments made. Employers keep the employee's kilometre log alongside those records. Retain everything for six years.

## Sources

- **Department of Finance Canada** — [Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses](https://www.canada.ca/en/department-finance/news/2026/01/government-announces-the-2026-automobile-deduction-limits-and-expense-benefit-rates-for-businesses.html) (14 January 2026)
- **Justice Laws Website** — [Income Tax Regulations, section 7306 (consolidated)](https://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._945/section-7306.html) (Base rate lags the Finance release)
- **Canada Revenue Agency** — [Automobile or motor vehicle benefits — allowances or reimbursements for an employee's own vehicle](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances.html) (canada.ca)
- **Canada Revenue Agency** — [Meal and vehicle rates used to calculate travel expenses](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-25500-northern-residents-deductions/meal-vehicle-rates-previous-years.html) (Modified 20 January 2026)
- **Canada Revenue Agency** — [GST/HST Memorandum 9.3 — Allowances; Calculate input tax credits](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/9-3/allowances.html) (canada.ca)
- **Canada Revenue Agency** — [T4130 Employers' Guide — Taxable Benefits and Allowances; Forms T2200, T777, T2125](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4130.html) (canada.ca)
- **Revenu Québec** — [Allowances for the use of a motor vehicle; RL-1 reporting](https://www.revenuquebec.ca/en/businesses/consumption-taxes/gsthst-and-qst/special-cases-gsthst-and-qst/expenses-incurred-by-employees-partners-and-volunteers/allowances/) (revenuquebec.ca)
- **National Joint Council** — [Travel Directive, Appendix A — kilometric rates](https://www.njc-cnm.gc.ca/directive/d10/v238/en) (Reviewed quarterly)

Taxability of any specific allowance is always a question of fact. This page is general education, not tax advice. Confirm anything you plan to rely on with a qualified Canadian tax professional before you file.

## Related

- [Canada guides hub](https://everylastmile.app/ca) — every CRA mileage and vehicle-expense guide
- [CRA mileage rate 2026](https://everylastmile.app/ca/cra-mileage-rate) — who can claim the rate, and what to claim instead
- [Vehicle expenses on Form T2125](https://everylastmile.app/ca/vehicle-expenses-t2125) — the actual-cost method for self-employed filers
- [CRA mileage log template](https://everylastmile.app/ca/cra-mileage-log-template) — free Excel and printable formats

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EveryLastMile is an automatic mileage tracker for iPhone that logs every drive with on-device sensor fusion and exports CRA-ready kilometre logs. Download: https://apps.apple.com/us/app/everylastmile-mileage-tracker/id6754286338