2026 CRA Per-Kilometre Automobile Allowance Rates
The Government of Canada has announced the 2026 automobile deduction limits and expense benefit rates, effective January 1, 2026. The per-kilometre allowance rates increased by 1 cent across the board.
| Kilometres | 2026 Rate (Provinces) | Change |
|---|---|---|
| First 5,000 km | 73¢/km | +1¢ |
| After 5,000 km | 67¢/km | +1¢ |
These rates represent the maximum tax-exempt allowance that employers can pay employees who use personal vehicles for business. Self-employed individuals typically use the actual expense method on T2125 but use the business-use percentage determined by their mileage log.
Territorial Rates (Yukon, NWT, Nunavut)
Employees and business owners in Canada's three territories receive higher per-kilometre rates to reflect the higher cost of operating a vehicle in the North:
| Kilometres | 2026 Territorial Rate | Change |
|---|---|---|
| First 5,000 km | 77¢/km | +1¢ |
| After 5,000 km | 71¢/km | +1¢ |
2025 vs 2026 Rate Comparison
| Region | Tier | 2025 | 2026 |
|---|---|---|---|
| Provinces | First 5,000 km | 72¢/km | 73¢/km |
| Provinces | After 5,000 km | 66¢/km | 67¢/km |
| Territories | First 5,000 km | 76¢/km | 77¢/km |
| Territories | After 5,000 km | 70¢/km | 71¢/km |
How to Calculate Your CRA Mileage Deduction
The CRA kilometric rate uses a two-tier system. The first 5,000 business kilometres get a higher rate, and every kilometre after that gets a lower rate:
Formula:
(First 5,000 km × $0.73) + (Remaining km × $0.67) = Allowance
Example Calculation
Marc is a freelance consultant in Ontario who drove 12,000 business kilometres in 2026:
| Tier | Kilometres | Rate | Amount |
|---|---|---|---|
| First 5,000 km | 5,000 km | × $0.73 | $3,650 |
| Remaining km | 7,000 km | × $0.67 | $4,690 |
| Total mileage allowance | $8,340 | ||
If Marc is an employee receiving this as a tax-free allowance, no further action is needed. If he's self-employed, he'll use his mileage log to determine the business-use percentage for the actual expense method on T2125.
T2125 Line 9200 — Motor Vehicle Expenses
Self-employed Canadians report vehicle expenses on Form T2125 — Statement of Business or Professional Activities. Here's where mileage fits in:
- Line 9281 — Motor vehicle expenses (the total amount of vehicle expenses multiplied by your business-use percentage)
- Part 7 — Motor vehicle expenses — This is where you calculate your business-use percentage based on your mileage log
- Line 9200 — Total motor vehicle expenses (appears on page 2 of T2125 as part of the expenses summary)
Unlike employees who receive a per-km allowance, self-employed individuals deduct the business-use percentage of actual vehicle expenses — fuel, insurance, maintenance, CCA (depreciation), licence fees, and interest on a car loan. Your mileage log determines the business-use percentage (business km ÷ total km).
The ExpenseBot Canada expense tracker helps track vehicle expenses alongside mileage and generates T2125-ready reports with the correct line references.
Business vs Personal Use
The CRA requires you to separate business driving from personal driving. Your mileage log must show both to calculate the business-use percentage.
What the CRA Considers Business Use
- Driving between clients or job sites
- Visiting suppliers or picking up business materials
- Driving to the bank or post office for business purposes
- Traveling to business meetings
- Real estate agents driving between showings
- Deliveries to customers
What Doesn't Qualify
- Commuting from home to your regular place of business
- Personal errands, even during business hours
- Driving to pick up lunch (unless for a business meeting)
If your home is your principal place of business, the CRA allows you to count drives from home to clients, temporary work locations, and business errands as business kilometres — including the first and last trip of the day.
Track mileage with Google Maps — CRA rates built in
ExpenseBot imports trips from Google Calendar and calculates distances automatically using the 2026 CRA kilometric rates.
How to Track Mileage for CRA
The CRA expects a vehicle logbook that records each business trip as it happens — not reconstructed at year-end. Here are your options:
- Paper logbook — Record date, destination, purpose, and odometer readings. The CRA's traditional requirement, but easy to forget.
- Spreadsheet — Use a Google Sheets template with columns for date, start/end locations, purpose, and km driven.
- GPS apps — Auto-record drives but drain battery and track all driving (personal included).
- Google Maps + Calendar integration — The ExpenseBot mileage tracker imports appointments from Google Calendar, uses Google Maps for distance calculation, and applies the current CRA rates automatically.
The CRA allows a simplified logbook method: keep a full logbook for one complete 12-month period, then in subsequent years keep a 3-month sample period. If the business-use percentage is within 10% of the base year, you can use it for the full year. ExpenseBot's continuous tracking makes the full-year method effortless.
CRA Mileage Log Requirements
The CRA requires the following information for each business trip in your vehicle logbook:
- Date of the trip
- Destination (where you drove)
- Business purpose (reason for the trip)
- Kilometres driven (odometer or calculated distance)
- Odometer readings at the start and end of the year (to determine total km driven)
- Total business km and total personal km for the year
Motor vehicle expenses are one of the CRA's most-audited items for self-employed individuals. If you claim vehicle expenses without a logbook, the CRA can disallow the entire deduction. Keep your logbook current throughout the year.
Digital mileage logs are fully accepted by the CRA. In fact, logs with Google Maps distance verification and calendar timestamps provide stronger audit support than handwritten entries.