If you use a personal vehicle for work in Canada, the CRA lets you deduct those costs — but only if you follow the right process. This guide explains exactly how to claim mileage on taxes in Canada for the 2026 tax year, whether you are self-employed or an employee. The path you take, the forms you file, and the records you keep all depend on your employment status.
Self-Employed vs Employee: Two Different Claiming Paths
The single biggest factor in how you claim mileage on taxes in Canada is whether you earn business income or employment income.
Self-employed (sole proprietors, freelancers, contractors): You report vehicle expenses on Form T2125 (Statement of Business or Professional Activities). No employer approval is needed. Your vehicle deduction reduces net business income before it flows onto your T1 return. Self-employed filers use the actual expense method — you track every eligible cost, calculate your business-use percentage, and deduct accordingly.
Employees: You claim vehicle expenses on Form T777 (Statement of Employment Expenses). Before you can file T777, your employer must sign Form T2200 confirming that you are required to use your own vehicle and that you are not fully reimbursed. The deduction enters your T1 return on Line 22900. Employees can use either the per-kilometre method or the actual expense method.
If your employer already reimburses you at the CRA rate, that reimbursement is tax-free and you cannot claim a further deduction. You can only claim if your costs exceed what you were reimbursed — and you will need to use the actual expense method to prove the difference.
Per-Kilometre Method vs Actual Expenses
Per-kilometre method
The simpler option. You multiply your business kilometres by the CRA’s published rates instead of tracking every receipt:
- First 5,000 business km: $0.73/km
- Each km after 5,000: $0.67/km
- Yukon, NWT, and Nunavut: $0.77 and $0.71 respectively
This method is available to employees claiming on T777. Self-employed filers on T2125 generally must use the actual expense method.
Actual expense method
You total every vehicle cost for the year, then multiply by your business-use percentage:
| Eligible expense | 2026 cap (if any) |
|---|---|
| Fuel and oil | No cap |
| Insurance | No cap |
| Maintenance and repairs | No cap |
| Lease payments | $1,100/month before tax |
| Loan interest | $350/month |
| CCA (vehicle depreciation) | $39,000 Class 10.1 ceiling |
| Registration and licensing | No cap |
| Parking (business only) | No cap |
Business-use percentage = Business km ÷ Total km driven that year.
You apply that percentage to your total expenses to arrive at the deductible amount. You cannot switch methods partway through the year — pick one and use it for the full tax year.
For a deeper comparison of these two approaches, see mileage rate vs actual expenses CRA.
What Counts as Business Driving
Not every work-related trip qualifies. The CRA draws a clear line between business driving and personal commuting.
Deductible (business driving):
- Driving from one work location to another (office to client site)
- Travel to a temporary work location (expected to last under 12 months)
- Client meetings, deliveries, supply pickups, bank visits
- Driving from a qualifying home office to any business destination
Not deductible (personal commuting):
- Driving from home to your regular, fixed workplace
- Driving home at the end of the day from that same workplace
- Personal errands, even if done during the workday
The home-office exception matters. If your home is your principal place of business — used regularly and exclusively for work — then every trip from home to a client or work site counts as business driving, not commuting. This can significantly increase your deductible kilometres.
Step-by-Step: How to Claim Mileage on Your Tax Return
If you are self-employed
- Track every trip throughout the year — date, destination, business purpose, and kilometres driven. Record your odometer at January 1 and December 31.
- Collect all vehicle receipts — fuel, insurance, repairs, lease or loan statements, registration.
- Calculate your business-use percentage — business km ÷ total km.
- Complete Form T2125, Part 9 (Charts A, B, and C). Enter total vehicle expenses in Chart A, lease limits in Chart B, and CCA in Chart C.
- The vehicle deduction reduces your net business income on Line 13500, 13700, or 13900 of your T1, lowering both income tax and CPP contributions.
For the full T2125 line-by-line walkthrough, see T2125 vehicle expenses self-employed.
If you are an employee
- Get Form T2200 signed by your employer before filing season.
- Track every trip — same requirements as self-employed: date, destination, purpose, km.
- Complete Form T777, Section C. Calculate the deduction using per-km rates or actual costs.
- Enter the total on Line 22900 of your T1 return.
- Keep T2200 on file — you do not submit it with your return, but the CRA may request it.
For the full employee process, see T777 statement employment expenses vehicle.
Real Calculation Example
Meet Priya, a self-employed consultant in Ontario who drove 28,000 km in 2026 — 18,000 km for business and 10,000 km personal. Her business-use percentage is 18,000 ÷ 28,000 = 64.3%.
Per-km method (for comparison):
- 5,000 × $0.73 = $3,650
- 13,000 × $0.67 = $8,710
- Total: $12,360
Actual expense method:
| Expense | Annual cost |
|---|---|
| Fuel | $4,800 |
| Insurance | $2,400 |
| Maintenance | $1,200 |
| Lease payments | $13,200 ($1,100 × 12) |
| Registration | $120 |
| Total | $21,720 |
Business-use deduction: $21,720 × 64.3% = $13,966
In Priya’s case, the actual expense method yields $1,606 more than the per-km approach. At a 30% marginal tax rate, that is roughly $480 in additional tax savings — worth the extra record-keeping effort.
The takeaway: always calculate both methods before filing. If your vehicle costs are high — especially if you lease — the actual expense method will likely win. If you drive a fuel-efficient car with low operating costs, the per-km rate may come out ahead. Tripbook’s year-end report gives you the total business kilometres you need to run both calculations side by side.
Keep a CRA-Compliant Mileage Log
Regardless of which method or form you use, the CRA requires a mileage logbook. Without it, your entire vehicle deduction can be denied on audit — even if you have every receipt. The log must include:
- Date of each trip
- Destination and business purpose (specific, not just “work”)
- Kilometres driven per trip
- Odometer readings at the start and end of the year
- Total annual kilometres for all purposes
Acceptable purpose entries: “Client meeting — Chen account,” “Delivery to 100 Front St,” “Site inspection — Barrie project.” Vague entries like “business” across hundreds of trips suggest the log was not kept in real time.
Tripbook builds a GPS-verified mileage log automatically — it records the date, route, and distance for each trip, and you add the business purpose. At tax time, Tripbook generates the year-end summary you need to complete your T2125 or T777 with confidence.
The CRA requires you to keep all vehicle records for six years from the end of the tax year. That means your 2026 logbook and receipts must be retained until at least the end of 2032.
