Canada
CRA Mileage Allowance Calculator (2026 Rates)
For 2026, the CRA generally treats a per-kilometre allowance of 73¢ for the first 5,000 business kilometres and 67¢ for each additional kilometre as reasonable, with 4¢ more for each kilometre driven in Yukon, the Northwest Territories or Nunavut. These rates apply when an employer pays an employee for driving the employee's own car for work, electric cars such as a Tesla included. Self-employed drivers and company-car drivers follow other rules, described below.
Updated on
Estimate a reasonable per-kilometre allowance
Enter a distance to see the estimate.
No official rate exists for this choice.
Estimated reasonable allowance (CAD)
$7,000.00
Calculation detail
- Up to 5,000 km5,000 km × 0.73 $3,650.00
- Over 5,000 km5,000 km × 0.67 $3,350.00
CRA rates for the year 2026
CRA rules and rates behind the calculator
Reasonable per-kilometre allowance (employee's own car)
An allowance paid to an employee for driving their own vehicle for work stays out of income when it is reasonable and based solely on the kilometres driven for employment (Income Tax Act, subparagraphs 6(1)(b)(vii.1), (x) and (xi)). The CRA generally accepts the amounts prescribed by section 7306 of the Income Tax Regulations 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 the employer's deduction for tax-free allowances (paragraph 18(1)(r)). For 2026, the rates rest on the Department of Finance announcement of January 14, 2026 and the CRA rate table; the consolidated text of section 7306, current to September 30, 2026, still shows the 2025 amounts. With 12,000 business kilometres driven in a province in 2026, the allowance reaches 5,000 × $0.73 + 7,000 × $0.67 = $3,650.00 + $4,690.00 = $8,340.00; driven entirely in a territory, the same distance gives $3,850.00 + $4,970.00 = $8,820.00.
Formula
Allowance = provincial first-band rate × min(km, 5,000) + provincial second-band rate × max(km − 5,000, 0) + $0.04 × km driven in Yukon, the Northwest Territories or Nunavut, where km = business kilometres driven by the employee in the year, all cars combined.
| Year (rates in force) | Provinces: first 5,000 km | Provinces: each additional km | Yukon, NWT, Nunavut: first 5,000 km | Yukon, NWT, Nunavut: each additional km |
|---|---|---|---|---|
| 2026 (January 1 to December 31, 2026) | $0.73 | $0.67 | $0.77 | $0.71 |
| 2025 (January 1 to December 31, 2025) | $0.72 | $0.66 | $0.76 | $0.70 |
| 2024 (January 1 to December 31, 2024) | $0.70 | $0.64 | $0.74 | $0.68 |
Conditions
- Based solely on the number of kilometres driven for employment: a flat car allowance that ignores distance is taxable income.
- Any separate reimbursement for the same use makes the allowance unreasonable, except supplementary business insurance, tolls and ferry charges when the rate was set without them.
- One individual's 5,000 km band covers every car that person drives in a taxation year (section 7306); when the employer's fiscal year differs from the calendar year, an accountant should confirm when the band restarts.
- Each kilometre driven in Yukon, the Northwest Territories or Nunavut earns the 4¢ territorial supplement.
- An employee who receives a non-taxable allowance cannot also deduct car expenses on Form T777 (guide T4044).
- Electric, hybrid and gasoline cars share the same rates: neither section 7306 nor the CRA table sets an EV rate.
Official 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
Operating expense benefit (company car)
When an employer pays the operating costs of an automobile made available to an employee, electricity included, the personal share is a taxable benefit (Income Tax Act, paragraph 6(1)(k)). Under the per-kilometre method, each personal kilometre is valued at the rate prescribed by section 7305.1 of the Income Tax Regulations. Travel between home and a regular place of employment counts as personal driving. One rate covers every automobile: the CRA employer guide T4130 states that zero-emission passenger vehicles are automobiles, so a Tesla carries the same 34¢ as a gasoline car. With 6,000 personal kilometres in 2026, the benefit equals 6,000 × $0.34 = $2,040.00.
Formula
Per-kilometre method: benefit = personal km × prescribed rate − amounts the employee repays within 45 days after the end of the year. Optional method: benefit = 50% × standby charge (before reimbursements) − repayments.
| Year (rate in force) | General rate per personal km | Employees principally selling or leasing automobiles |
|---|---|---|
| 2026 (from January 1, 2026) | $0.34 | $0.31 |
| 2025 (from January 1, 2025) | $0.34 | $0.31 |
| 2024 (from January 1, 2024) | $0.33 | $0.30 |
Conditions
- Applies when the employer pays operating costs, such as electricity, for a car made available to the employee.
- Personal kilometres of each year are valued at that year's rate.
- The optional method requires employment use above 50% and written notice from the employee to the employer before the end of the year.
- Repayments made within 45 days after the end of the year reduce the benefit.
Official sources
- Automobile provided by the employer Canada Revenue Agency
- 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)
- T4130 Employers' Guide: Taxable Benefits and Allowances Canada Revenue Agency
Standby charge and reduced standby charge (company car)
An employee to whom an employer makes an automobile available is taxed on a standby charge, computed per automobile and per taxation year (Income Tax Act, subsection 6(2)). For an owned car, the charge equals 2% of the car's cost for each 30-day period of availability; a leased car carries two thirds of the lease cost for the days available, insurance excluded. The charge falls in proportion to personal driving when the employer requires the employee to use the car for work and the car is used more than 50% for employment. No exemption exists for electric automobiles. A car bought for $60,000 (sales taxes included), available all year (n = 12, B = 20,004 km) and driven 8,000 personal kilometres, has a full charge of $14,400.00, reduced to $14,400.00 × 8,000 ÷ 20,004 = $5,758.85.
Formula
q = days available ÷ 30; n = q when q is 1 or less, otherwise q rounded to the nearest whole number (a value exactly halfway rounds down). Owned car: SC = 2% × cost × n. Leased car: SC = 2/3 × (lease payments − insurance part). Reduced SC = SC × A ÷ B, with B = 1,667 km × n and A = the lesser of personal km and B.
| Parameter | Value |
|---|---|
| Personal-driving ceiling per 30-day period | 1,667 km |
| Personal-driving ceiling for a full year (n = 12) | 20,004 km |
| Minimum employment use for the reduction | More than 50% |
| Standby charge, owned car | 2% of cost per 30-day period |
| Standby charge, leased car | 2/3 of the lease cost |
Conditions
- Personal kilometres must stay below B for any reduction; at B or above, the full charge applies.
- Employment use must exceed 50% of the distance driven.
- The employer must require the employee to use the automobile in connection with the employment.
- A period of 30 days or less keeps the exact fraction: February (28 days) gives B = 1,555.9 km. A 31-day month gives n = 1 and B = 1,667 km.
- Each automobile and each taxation year is assessed separately, so a period spanning several years is split by year.
- Employees keep a logbook or daily record and give the employer a copy.
Official sources
- Income Tax Act, section 6 Justice Laws Website (Government of Canada)
- Automobile provided by the employer Canada Revenue Agency
- T4130 Employers' Guide: Taxable Benefits and Allowances Canada Revenue Agency
Self-employed drivers: actual vehicle costs
Self-employed individuals and partners have no flat per-kilometre rate. They deduct the business share of their actual vehicle expenses in Chart A of Form T2125: total eligible expenses multiplied by business kilometres over total kilometres. For a zero-emission vehicle, electricity is a listed expense. Parking fees and supplementary business insurance are deductible in full. Capital cost allowance, lease costs and loan interest are capped per vehicle, with dated limits announced each year by the Department of Finance.
Formula
Deductible amount = (electricity, insurance, maintenance, interest, lease, capital cost allowance) × business km ÷ total km + business parking fees + supplementary business insurance. CRA example: 27,000 ÷ 30,000 × $7,000 = $6,300.
| Limit for 2026 | Amount | Scope |
|---|---|---|
| Class 10.1 capital cost ceiling | $39,000 before tax | Passenger vehicles acquired from January 1, 2026 ($38,000 in 2025) |
| Class 54 ceiling (zero-emission passenger vehicles) | $61,000 before tax | Unchanged for 2026 |
| Deductible lease cost | $1,100 per month before tax | Leases entered into from January 1, 2026 (unchanged) |
| Deductible loan interest | $350 per month | New automobile loans entered into from January 1, 2026 (unchanged) |
Conditions
- Business use equals business kilometres divided by total kilometres for the year, taken from a logbook.
- Trips between home and a regular place of work count as personal.
- An employee claiming car expenses on Form T777 needs a signed Form T2200, must normally work away from the employer's place of business, must pay the car costs under the employment contract and must receive no non-taxable allowance (guide T4044).
Official sources
- Motor vehicle expenses Canada Revenue Agency
- Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses (January 14, 2026) Department of Finance Canada
- T4044 Employment Expenses Canada Revenue Agency
Logbook and business-use percentage
All the calculations above start from logged kilometres, and the business-use percentage equals business kilometres divided by total kilometres. For each business trip, the CRA asks for the date, the destination, the purpose and the kilometres driven, plus the odometer reading at the start and end of the fiscal period. After a full 12-month base-year logbook, a three-month sample logbook can extrapolate the business use of a later year.
Formula
Annual business use = (sample-period % ÷ same period's % in the base year) × base-year annual %. CRA example: (51% ÷ 46%) × 49% = 54%, accepted because it stays within 10 percentage points of 49%.
Conditions
- Records are kept for six years from the end of the tax year they relate to.
- A base-year logbook is kept for six years from the end of the last tax year in which it is used to establish business use.
- When the extrapolated result moves more than 10 percentage points from the base year, a new 12-month logbook is needed.
Official sources
- Motor vehicle records Canada Revenue Agency
- Motor vehicle expenses Canada Revenue Agency
Frequently asked questions
What is the CRA mileage rate for 2026?
For 2026, the reasonable per-kilometre allowance is 73¢ for the first 5,000 business kilometres and 67¢ for each additional kilometre. Kilometres driven in Yukon, the Northwest Territories or Nunavut earn 4¢ more (77¢ and 71¢). For company cars, the operating expense benefit stays at 34¢ per personal kilometre (31¢ for employees principally selling or leasing automobiles).
Is a car allowance taxable in Canada?
Paid as a flat amount that ignores distance, a car allowance is taxable employment income. A per-kilometre allowance stays tax-free when it is reasonable, based solely on kilometres driven for work and paid without a separate reimbursement for the same use (supplementary business insurance, tolls and ferries excepted when the rate was set without them).
Does an electric car like a Tesla get a different per-kilometre rate?
No. The CRA rate table sets the same amounts for every vehicle, and section 7305.1 of the Income Tax Regulations prescribes a single operating-benefit rate for every automobile. Zero-emission passenger vehicles count as automobiles, as the CRA employer guide T4130 states.
How is the 5,000 km band counted?
Section 7306 of the Income Tax Regulations applies the higher rate to the first 5,000 kilometres an individual drives for work in a taxation year, all cars combined. Beyond 5,000 business kilometres, each further kilometre uses the lower rate. If the employer's fiscal year does not follow the calendar year, ask an accountant when the band restarts.
Can self-employed people claim 73¢ per kilometre?
No. The per-kilometre rates set the tax-free allowance an employer pays an employee. Self-employed drivers deduct the business share of their actual costs (electricity, insurance, maintenance, interest or lease, capital cost allowance) on Form T2125, using business kilometres divided by total kilometres from their logbook.