CRA Mileage Rate 2026: 73¢ and 67¢ per Kilometre
The CRA mileage rate for 2026 is 73¢ per kilometre for the first 5,000 business kilometres and 67¢ for each additional kilometre, up one cent from 2025. Kilometres driven in Yukon, the Northwest Territories or Nunavut earn 4¢ more (77¢ and 71¢). An employer can pay these amounts to an employee who drives their own car for work, an electric Tesla included, without the allowance becoming taxable income, and the same figures cap the employer's deduction.
What are the CRA kilometre rates for 2026?
The Department of Finance announced the 2026 figures on January 14, 2026, and the CRA applies them in its table of automobile allowance rates. In the provinces, the CRA generally treats as reasonable an allowance of 73¢ per kilometre for the first 5,000 kilometres driven for work in the year and 67¢ for each kilometre after that. Section 7306 of the Income Tax Regulations adds 4¢ for each kilometre driven in Yukon, the Northwest Territories or Nunavut, which gives 77¢ and 71¢ there. That release kept the operating expense benefit at 34¢ per personal kilometre for employees who drive a company car whose running costs the employer pays (31¢ for employees principally selling or leasing automobiles). When this page was reviewed, the consolidated text of section 7306, current to September 30, 2026, still showed the 2025 amounts. The 2026 rates rest on the Finance announcement and the CRA table until the amending regulation appears.
How have the rates changed since 2024?
In 2024 the CRA rates were 70¢ for the first 5,000 km and 64¢ after (74¢ and 68¢ in the territories). For 2025 they moved to 72¢ and 66¢ (76¢ and 70¢), and for 2026 to 73¢ and 67¢ (77¢ and 71¢). Each year's rates apply to the kilometres driven in that year, so a claim covering December 2025 and January 2026 uses both sets. Company-car drivers saw the operating expense benefit go from 33¢ in 2024 to 34¢ in 2025, where it stayed for 2026; for employees principally selling or leasing automobiles, the rate went from 30¢ to 31¢.
How do you calculate an allowance with the 2026 rates?
Multiply the first 5,000 business kilometres of the year by 73¢, then every kilometre beyond 5,000 by 67¢, and add 4¢ for each kilometre driven in the territories. For 12,000 business kilometres in Ontario in 2026: 5,000 × $0.73 = $3,650.00, plus 7,000 × $0.67 = $4,690.00, for a total of $8,340.00. Driven entirely in Yukon, the same distance gives 5,000 × $0.77 + 7,000 × $0.71 = $3,850.00 + $4,970.00 = $8,820.00. The 5,000 km band belongs to the individual: section 7306 counts the kilometres one person drives in a taxation year, all cars combined. If the employer's fiscal year does not follow the calendar year, check with an accountant when the band restarts. Our mileage allowance calculator applies this formula to the rates of 2024, 2025 and 2026.
When is a per-kilometre allowance tax-free?
Under subparagraphs 6(1)(b)(vii.1), (x) and (xi) of the Income Tax Act, an allowance for using a vehicle for work is excluded from the employee's income when it is reasonable. The Act deems it unreasonable when it is not based solely on the kilometres driven for employment, or when the employee also receives a reimbursement for the same use, with supplementary business insurance, tolls and ferry charges excepted when the rate was set without them. A flat monthly car allowance is therefore taxable. The CRA generally treats the section 7306 amounts as reasonable and judges a higher or lower rate on all the facts, so such a rate may not be accepted. Those amounts also cap what the employer can deduct for tax-free allowances (paragraph 18(1)(r)). An employee who receives a non-taxable allowance cannot also deduct car expenses on Form T777, according to the CRA guide T4044.
Does a Tesla or other electric car use the same rate?
Yes. The CRA table sets one series of amounts for every vehicle, so an employee driving their own Tesla for work can receive 73¢ and 67¢ tax-free like a gasoline driver. On the company-car side, section 7305.1 of the Income Tax Regulations prescribes a single operating-benefit rate for every automobile, and the CRA employer guide T4130 states that zero-emission passenger vehicles are automobiles. A Tesla made available by an employer therefore carries the same 34¢ per personal kilometre, even though charging costs less than fuel. Self-employed Tesla owners use neither rate and deduct the business share of their actual costs, electricity included, on Form T2125.
What records support the allowance?
For each business trip, the CRA expects a logbook to show the date, the destination, the purpose and the distance, with odometer readings at the start and end of the period. Keep the records for six years from the end of the tax year they relate to. A Tesla already measures every trip, and Odoproof turns that data into a logbook that shows the business kilometres for each period.
Sources
- Automobile and motor vehicle allowances (rate table) Canada Revenue Agency
- Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses (January 14, 2026) Department of Finance Canada
- Government Announces the 2025 Automobile Deduction Limits and Expense Benefit Rates for Businesses (December 30, 2024) Department of Finance Canada
- Income Tax Act, section 6 Justice Laws Website (Government of Canada)
- Income Tax Regulations, sections 7305.1 and 7306 Justice Laws Website (Government of Canada)
- T4044 Employment Expenses Canada Revenue Agency
- T4130 Employers' Guide: Taxable Benefits and Allowances Canada Revenue Agency
- Motor vehicle records Canada Revenue Agency
FAQ
Did the CRA kilometre rate change in 2026?+
Yes. It rose by one cent: 73¢ for the first 5,000 business kilometres and 67¢ after, compared with 72¢ and 66¢ in 2025. The operating expense benefit stayed at 34¢ per personal kilometre.
Is the 2026 rate different in the territories?+
Each kilometre driven in Yukon, the Northwest Territories or Nunavut earns 4¢ more, so the rates there are 77¢ for the first 5,000 km and 71¢ after.
Can I claim 73¢ per kilometre as a self-employed person?+
No. The rate sets the tax-free allowance an employer pays an employee. Self-employed people deduct the business share of their actual vehicle costs on Form T2125.
A tax-free allowance at the 2026 CRA rates of 73¢ and 67¢ rests on kilometres you can show were driven for work. Start your 7-day free trial of Odoproof to log every Tesla trip automatically and back each allowance with a CRA-ready record.
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