The CRA mileage rate 2026 is $0.73 per kilometre for the first 5,000 business kilometres and $0.67/km for every kilometre after that. The Government of Canada announced the new automobile allowance rates on January 14, 2026, with a one-cent increase across the board compared to 2025.
Whether you are an employee getting reimbursed for work travel or a self-employed professional deducting vehicle costs on your tax return, these rates determine how much you can claim. This guide breaks down the official figures, shows you exactly how the math works, and explains what the CRA expects you to keep on file.
CRA Mileage Rate 2026: Official Figures
The Canada Revenue Agency publishes two tiers of per-kilometre rates each year. These are the official 2026 automobile allowance rates, effective January 1, 2026:
| Region | First 5,000 km | Each Additional km |
|---|---|---|
| All provinces (ON, BC, AB, QC, etc.) | $0.73 | $0.67 |
| Territories (YT, NT, NU) | $0.77 | $0.71 |
The territorial supplement of $0.04/km reflects higher fuel costs, longer distances, and limited access to vehicle maintenance in the North.
What Changed from 2025 to 2026?
Both tiers increased by one cent per kilometre. Here is the year-over-year comparison:
| Rate Tier | 2025 | 2026 | Change |
|---|---|---|---|
| Provinces — first 5,000 km | $0.72 | $0.73 | +$0.01 |
| Provinces — after 5,000 km | $0.66 | $0.67 | +$0.01 |
| Territories — first 5,000 km | $0.76 | $0.77 | +$0.01 |
| Territories — after 5,000 km | $0.70 | $0.71 | +$0.01 |
The one-cent increase is modest, but it compounds across thousands of business kilometres. A driver logging 15,000 business km per year gains an extra $150 in deductible value compared to 2025.
How the 5,000 km Threshold Works
The CRA per km rate 2026 uses a two-tier structure. You receive the higher rate on your first 5,000 business kilometres each calendar year. Every kilometre after that falls to the lower rate. The threshold resets on January 1.
Example — 8,000 business km in Ontario:
- First 5,000 km at $0.73 = $3,650
- Remaining 3,000 km at $0.67 = $2,010
- Total allowance: $5,660
Example — 4,000 business km in Alberta:
- 4,000 km at $0.73 = $2,920
- All kilometres fall under the first tier
Example — 12,000 business km in Yukon:
- First 5,000 km at $0.77 = $3,850
- Remaining 7,000 km at $0.71 = $4,970
- Total allowance: $8,820
These calculations apply whether you are receiving an employer reimbursement or using the rates as a benchmark for your deduction claim.
Employees vs. Self-Employed: How to Claim
The automobile allowance rate 2026 affects employees and self-employed individuals differently. Understanding which rules apply to you is critical for filing correctly.
Employees
If you use your personal vehicle for work, your employer may pay you a per-kilometre allowance. When that allowance matches the CRA kilometre rate, it is tax-free and does not appear as income on your T4 slip.
To claim vehicle expenses yourself as an employee, you need:
- A signed T2200 (Declaration of Conditions of Employment) from your employer
- Form T777 (Statement of Employment Expenses) filed with your T1 return
- A complete mileage log showing every business trip
If your employer pays below the CRA rate, you can claim the difference as an employment expense. If they pay above the rate, the excess is a taxable benefit.
Self-Employed Individuals
Self-employed taxpayers cannot simply multiply their kilometres by the CRA per-km rate. Instead, you must track your actual vehicle expenses — fuel, insurance, maintenance, repairs, licence and registration, interest on a car loan, lease payments, and capital cost allowance — then apply your business-use percentage.
You report these expenses in Part 4 of Form T2125 (Statement of Business or Professional Activities). The CRA mileage rate serves as a benchmark for what constitutes a reasonable reimbursement, but your deduction is based on real costs, not a flat per-km amount.
Example: You spent $14,000 in total vehicle costs in 2026 and drove 65% for business. Your deduction is $14,000 x 65% = $9,100. Compare that to 15,000 km at the CRA rate: (5,000 x $0.73) + (10,000 x $0.67) = $10,350. In this case, the per-km benchmark exceeds your actual costs.
For a complete walkthrough of self-employed deductions, see our guide to self-employed vehicle expenses in Canada.
The Simplified Logbook Method
The CRA offers a simplified logbook method that reduces record-keeping after your first full year of tracking. Here is how it works:
- Base year: Maintain a complete logbook for one full 12-month period, recording every business trip with date, destination, purpose, and odometer readings.
- Sample year: In subsequent years, keep a detailed log for any three consecutive months.
- Calculate: Use the formula — (sample period % / base year same-period %) x base year annual % = your calculated business-use percentage for the year.
- Apply: Multiply your annual vehicle expenses by that calculated percentage.
The method is valid as long as your calculated business-use percentage stays within 10 percentage points of your base year. If your driving pattern changes substantially — new job, new city, major new client — you must establish a new base year.
Even with the simplified method, you still need January 1 and December 31 odometer readings each year. Tripbook records these automatically, so you never miss a reading.
For full details on qualification rules and examples, read our CRA simplified logbook method guide.
Records the CRA Requires
Whether you use the CRA mileage rate for reimbursement or claim actual expenses, the CRA expects specific documentation for every business trip:
- Date of the trip
- Destination (client name or address)
- Business purpose (meeting, delivery, site visit, etc.)
- Odometer reading at start and end of trip
- Annual odometer readings on January 1 and December 31
You must also keep receipts for all vehicle expenses if you use the actual-expense method. The CRA can request these records for six years after the tax year, so a trip you drove in January 2026 must be on file until at least 2032.
Reconstructing a logbook from memory months later is unreliable and will not hold up in an audit. The safest approach is to log trips as they happen. Tripbook captures the date, route, distance, and purpose of every trip automatically using GPS — building a CRA-compliant log in the background while you drive.
Other 2026 Automobile Deduction Limits
The CRA mileage rate is one piece of a larger framework. Here are the other key automobile limits for 2026:
| Limit | 2026 Amount |
|---|---|
| CCA ceiling (Class 10.1 passenger vehicles) | $39,000 before tax |
| CCA ceiling (Class 54 zero-emission vehicles) | $61,000 before tax |
| Maximum deductible lease cost | $1,100/month before tax |
| Maximum deductible interest on car loans | $350/month |
| Taxable benefit rate (personal use of employer car) | $0.34/km |
These caps apply regardless of what you actually paid. For example, if you bought a $55,000 sedan, your CCA is calculated on $39,000, not $55,000. For a deeper look at how capital cost allowance works, see our guide to capital cost allowance on vehicles in Canada.
Common Mistakes That Trigger CRA Audits
Using the per-km rate when you are self-employed. Self-employed taxpayers must use the actual-expense method. Claiming a flat per-km deduction on your T2125 is incorrect and will be reassessed.
Forgetting year-end odometer readings. Without a December 31 reading, you cannot prove your total annual kilometres or your business-use percentage.
Claiming your commute. Driving from home to your regular place of business is personal travel. Only trips beyond your ordinary commute qualify as business kilometres.
Inflating distances. CRA auditors cross-reference logbook totals with odometer evidence. Rounded-up or estimated entries are a red flag.
Mixing calendar years. A trip driven on December 30 must be logged in 2026, not pushed into January 2027. The CRA rate and threshold reset each calendar year.
Start Tracking Every Kilometre Now
The CRA mileage rate 2026 puts up to $0.73 per kilometre back in your pocket — but only if you have the records to prove your business driving. Every trip you forget to log is a deduction you cannot claim.
Download Tripbook and start building a CRA-compliant mileage log today. Automatic GPS tracking means no manual entries, no forgotten trips, and a complete record ready for tax season or a CRA audit.
