CRA Mileage Rate 2026 and How to Claim Vehicle Expenses

The 2026 rate

For 2026, CRA's reference rate is $0.73 per kilometre for the first 5,000 business kilometres driven in a year, and $0.67 per kilometre for every kilometre after that. If your business is based in Yukon, the Northwest Territories, or Nunavut, add $0.04 per kilometre on top of both tiers.

Who this rate is actually for

This tiered rate is CRA's reasonable per-kilometre allowance — the rate an employer can pay an employee, tax-free, to reimburse them for using their own vehicle for work. It was never designed as a self-employed deduction formula.

Why self-employed sole proprietors can't just use it directly

If you're a sole proprietor, CRA doesn't let you multiply your business kilometres by this rate and call that your vehicle expense deduction on Form T2125. The only method available to an unincorporated business is the actual-expense method: add up your real vehicle costs for the year, then multiply by your business-use percentage — business kilometres divided by total kilometres driven, personal and business combined.

What counts as a real vehicle cost

Actual eligible vehicle expenses typically include:

• Fuel and oil
• Insurance
• Licence and registration fees
• Maintenance and repairs
• Capital cost allowance (CCA) — the tax term for depreciation, claimed on Class 10 or Class 10.1 depending on the vehicle's cost (Class 10.1 applies once a passenger vehicle's pre-tax cost exceeds a CRA ceiling, $39,000 for vehicles acquired in 2026)
• Interest on a car loan, up to a monthly cap ($350/month for loans entered into in 2026)
• Lease payments, up to a monthly cap ($1,100/month, before tax, for leases entered into in 2026)

You total these actual costs, then apply your business-use percentage — so accurately knowing that percentage, not the per-kilometre rate, drives your actual deduction.

The logbook: full-year or simplified

To support your business-use percentage, the CRA expects a mileage logbook recording each trip's date, destination, purpose, and distance. Keeping a full logbook every year is the default requirement, but once you've completed one full 12-month "base year" logbook, the CRA allows a simplified approach afterward: a 3-month sample logbook, extrapolated against the base year's results for the same months, as long as the calculated business-use percentage stays within 10% of the base year's overall figure. Our mileage log requirements guide covers exactly what each logged trip needs to include.

Our mileage log tool uses this published rate to give you a fast estimate as you log trips throughout the year — treat the number it shows as a reference point, not your final tax deduction, and confirm your actual claim with your vehicle expense records or a professional.

A worked example

Say your actual vehicle costs for the year total $9,000 (fuel, insurance, maintenance, and CCA combined), and your logbook shows 12,000 business kilometres out of 20,000 total kilometres driven — a 60% business-use percentage. Your deductible vehicle expense is $9,000 × 60% = $5,400, regardless of what the published per-kilometre rate would have suggested for the same distance.

Common mistakes to avoid

• Multiplying kilometres by the published rate and claiming that as your deduction — this method isn't available to unincorporated self-employed individuals.
• Estimating your business-use percentage instead of tracking it with a logbook — an estimate isn't something the CRA can verify, and won't hold up if your return is reviewed.
• Forgetting the interest and lease payment caps, and claiming the full amount paid instead of the capped monthly amount.
• Skipping the base year and jumping straight to a 3-month sample logbook — the simplified method is only available after a complete full-year logbook establishes your base.

Frequently asked questions

Does the per-kilometre rate ever matter for a sole proprietor? Yes — it's still the reference CRA itself uses for reasonable allowances paid by third parties, and it's a useful sanity-check for whether your actual-expense calculation lands in a plausible range, even though it's not your deduction formula directly.

Do I need receipts for every single vehicle expense? Yes — the actual-expense method requires supporting receipts for the costs you're claiming, the same as any other business expense.

What if I use more than one vehicle for business during the year? Track and calculate expenses and business-use percentage separately for each vehicle; you can't combine them into one blended calculation.

Official source: CRA – Automobile or motor vehicle allowances