CRA Mileage Rate 2026: 73¢/km — Canadian Per-Kilometre Rates

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.

Want your own number? Use the free mileage calculator — CRA and IRS rates built in, no signup.

Source: Department of Finance Canada — “Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses” (January 2026).

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:

2025 vs 2026 Rate Comparison

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:

Example Calculation

Marc is a freelance consultant in Ontario who drove 12,000 business kilometres in 2026:

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)

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
• Rideshare and delivery drivers (Uber, Lyft, DoorDash) — mileage is usually the single largest T2125 deduction

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)

Other tools that pair with this guide: free mileage log template for Google Sheets (IRS/CRA-compliant, pre-filled with 2026 rates), mileage reimbursement calculator (quick one-off deduction math), and the 2026 IRS mileage rate guide for US-side readers.

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:

1. Paper logbook — Record date, destination, purpose, and odometer readings. The CRA's traditional requirement, but easy to forget.
2. Spreadsheet — Use a Google Sheets template with columns for date, start/end locations, purpose, and km driven. If you prefer automation, the Google Sheets expense tracker imports receipts from Gmail directly into your spreadsheet.
3. GPS apps — Auto-record drives but drain battery and track all driving (personal included).
4. 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.

Paper logbook vs spreadsheet vs importing your trips

Knowing the rate is the easy half. The rate is worth nothing without a log the CRA will accept, and the trips people lose are the ones they meant to write down later. Here is what each approach actually costs you:

One honest caveat on the third column: importing from a calendar gives you a Google Maps estimate of the distance, not an odometer reading, and it can only see trips that were in your calendar in the first place. It is a way to stop losing trips — not a background tracker that follows your car.

CRA Mileage Log Requirements

The CRA requires the following information for each business trip in your vehicle logbook. Our free mileage log template (Google Sheets, IRS/CRA-compliant) includes a column for every field below:

Track all six on your T2125 →

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.

Source: Canada Revenue Agency — Motor vehicle records, which sets out the full-logbook requirement and the simplified base-year / three-month sample method described above.

Paper Logbook vs Automatic Tracking

Same six fields, two very different ways of ending up with them at tax time:

Prefer to keep it manual? The free CRA mileage log template (Google Sheets) already has a column for each of the six fields and the 2026 rates pre-filled.

Provincial Mileage Rates & Rules

The CRA mileage rate is a federal rate — it applies uniformly across all provinces. There is no separate "Ontario mileage rate" or "BC mileage rate." The 73¢/km (first 5,000 km) and 67¢/km (additional km) rate applies whether you drive in Toronto, Vancouver, Calgary, or anywhere else in Canada. The only exception is the territories (Yukon, NWT, Nunavut), which get a higher rate of 77¢/km and 71¢/km.

However, there are provincial differences in how your mileage deduction interacts with your overall tax return:

Ontario Mileage Rate 2026

The Ontario mileage rate for 2026 is the federal CRA rate: 73¢/km for the first 5,000 km, 67¢/km after. Ontario does not set a separate provincial mileage rate. Your mileage deduction on your T2125 reduces both your federal and Ontario provincial tax owing. Ontario's top combined marginal tax rate is 53.53%, meaning a $10,000 mileage deduction at the top bracket saves up to $5,353 in taxes. For gig economy drivers in the GTA — Uber, DoorDash, Instacart — mileage is typically the single largest deduction on your T2125.

British Columbia Mileage Rate 2026

The BC mileage rate for 2026 is the federal CRA rate: 73¢/km for the first 5,000 km, 67¢/km after. BC does not have a separate provincial rate. BC's top combined marginal rate is 53.50%. If you drive for business in Metro Vancouver, the Fraser Valley, or the BC Interior, keep in mind that BC has no provincial sales tax on fuel (fuel is subject to federal carbon tax and TransLink/BC Transit taxes in some regions), which may affect your actual-expenses calculation if you use that method instead of the per-km rate.

Alberta Mileage Rate 2026

The Alberta mileage rate for 2026 is the federal CRA rate: 73¢/km for the first 5,000 km, 67¢/km after. Alberta does not set a separate rate. Alberta's top combined marginal rate is 48%, the lowest among major provinces, so each dollar of mileage deduction saves slightly less in Alberta than in Ontario or BC. Alberta also has no provincial sales tax (PST), which can make the per-km simplified method more advantageous than the actual-expenses method compared to provinces with HST — since there's no PST on fuel and maintenance to claim back as ITCs.

The top combined federal–provincial marginal rates cited above (Ontario 53.53%, British Columbia 53.50%, Alberta 48.00%) are 2026 figures, per BDO Canada — 2026 top personal marginal tax rates. They apply only at the top bracket; most filers deduct at a lower rate. Estimates — confirm with your tax professional.

Quebec, Saskatchewan, Manitoba & Maritime Provinces — 2026 Rates

Every remaining province uses the identical federal CRA rate for 2026 — 73¢/km for the first 5,000 km and 67¢/km after. There is no separate Quebec, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, PEI, or Newfoundland and Labrador mileage rate. The table below is the definitive 2026 per-kilometre reference for all 13 provinces and territories:

Quebec deserves one note: while the CRA per-kilometre rate is the same, Quebec files a separate provincial return (TP-1) through Revenu Québec. Your business mileage deduction flows through both your federal T2125 and your Quebec TP-80, but the per-kilometre rate used to value the deduction is the single federal 73¢/67¢ figure — Revenu Québec does not publish a competing rate.

How to Calculate the CRA 2026 Allowance for Multi-Province Drivers

Drivers who cross provincial or territorial borders for business — long-haul sales reps, regional consultants, couriers, contractors working on cross-border projects — sometimes ask whether they should pro-rate the per-kilometre rate by province. The answer is no. The CRA per-kilometre rate is set federally and applies uniformly across all 10 provinces. It does not matter where you drove the kilometres — Ontario, BC, Alberta, Quebec, the Maritimes — they all use the same 73¢/67¢ tier structure for 2026.

The only exception is the territorial rate. If you live in or operate primarily out of the Yukon, Northwest Territories, or Nunavut, all of your business kilometres for the year qualify for the territorial rate of 77¢/km for the first 5,000 km and 71¢/km after. The territorial bonus applies based on the location of your employment or business — not the location where each kilometre was driven. A Yellowknife-based contractor who drives 2,000 km in Alberta during a project still gets the full territorial rate on those kilometres.

For employees who split time between a province and a territory, the CRA generally treats the rate as following your principal place of work. If you're seconded to a Yukon project for several months, the territorial rate applies to kilometres driven during the secondment. Check with your payroll team — most employers use a single rate for the year based on where you spent the majority of the work period.

The 5,000 km tier threshold is annual and cumulative across all provinces. You don't get a fresh 5,000 km allowance every time you cross a border; once your year-to-date business kilometres pass 5,000, every additional kilometre — whether driven in Toronto, Calgary, or Halifax — drops to the 67¢ rate. Keep your logbook running totals province-by-province if your employer or accountant wants the breakdown, but the rate itself is single-tier nationwide.

CRA Reasonable Allowance vs Tax-Free Reimbursement Rules

Whether a car allowance is tax-free or taxable to the employee depends on whether it qualifies as a "reasonable allowance" under the CRA's rules. There are three distinct categories, and only one of them is tax-free:

• Reasonable per-kilometre allowance (tax-free) — the employer pays a per-km rate at or below the CRA reasonable rate (73¢/67¢ for 2026 in the provinces, 77¢/71¢ in the territories), the rate is based solely on business kilometres actually driven, and the employee keeps a logbook substantiating the kilometres. This allowance does not appear on the T4 and is not taxable employment income.
• Allowance above the CRA rate (partially taxable) — if the employer reimburses above 73¢/67¢ per kilometre, the portion at or below the CRA rate remains tax-free, and the excess is reported on the T4 as taxable employment income. Some employers in competitive fields pay 80¢ or 90¢/km to attract drivers; the extra 10–20¢ above the CRA reasonable rate is taxable.
• Flat car allowance (fully taxable) — a fixed monthly payment (e.g. $500/month regardless of kilometres) is treated as additional salary because it isn't tied to actual business use. It's reported in Box 14 of the T4 and subject to income tax, CPP, and EI like any other wage. Many employers use flat allowances because they're administratively simpler — but the cost to the employee is meaningful, especially in higher tax brackets.

If you receive a flat allowance and you're self-employed (or have a side business that uses the same vehicle), you may still be able to deduct vehicle expenses on T2125 — but you have to include the flat allowance as income first, and your business-use percentage from your logbook still governs the deduction. The simpler path for most employees is to push your employer toward a reasonable per-km allowance with a logbook, since both sides come out ahead on tax.

For self-employed taxpayers, the reasonable-allowance rules don't apply — you deduct the business-use percentage of actual vehicle expenses on T2125 Part 7, and the CRA reasonable rate is only relevant if you also pay yourself a per-km allowance from a corporation. See the T2125 expense tracker guide for the full self-employed workflow.

Source: Canada Revenue Agency — Automobile allowance rates, which publishes the per-kilometre limits an employer can pay tax-free. Estimates — confirm with your tax professional.