If your employer requires you to drive your own vehicle for work, the T777 form vehicle expenses section is where you turn those kilometres into a tax deduction. Form T777 is the CRA’s official Statement of Employment Expenses, and Section C is the part that handles motor vehicle costs. Filling it out correctly can put thousands of dollars back in your pocket each spring, but a single mistake in your kilometres or missing paperwork can sink the entire claim.
This guide walks through every step of completing the vehicle expenses portion of Form T777 for the 2026 tax year, including a worked example with real numbers.
Who Can Use Form T777 for Vehicle Expenses?
Form T777 is exclusively for employees. If you are self-employed, you report vehicle expenses on Form T2125 instead. The distinction matters because employees face additional requirements that self-employed taxpayers do not.
You qualify to claim vehicle expenses on T777 if all three conditions are true:
- Your employment contract requires you to use a personal vehicle. Driving for work must be a condition of your job, not a convenience.
- Your employer has signed a T2200. The Declaration of Conditions of Employment is a hard prerequisite. Without a completed T2200 form, the CRA will reject your T777 claim outright.
- You are not fully reimbursed. If your employer covers all vehicle costs through a reasonable allowance at or above the CRA mileage rate, there is nothing left to claim. If you receive a partial allowance or one that is included in your T4 income, you can still file T777 for the uncovered portion.
Common roles that qualify include outside sales representatives, home-care nurses, field technicians, real estate agents employed by a brokerage, and any employee whose duties regularly take them away from a fixed office. For a deeper look at the employee versus contractor distinction, see our guide to contractor vs employee vehicle expenses.
T777 vs T2125: Which Form Do You File?
Choosing the wrong form is one of the most common vehicle expense mistakes Canadians make. Here is how T777 and T2125 compare:
| Feature | T777 (Employee) | T2125 (Self-Employed) |
|---|---|---|
| Who files it | Salaried or commission employees | Sole proprietors, freelancers, contractors |
| Employer form needed | Yes, signed T2200 required | No employer form |
| Where the deduction goes | Line 22900 (Other Employment Expenses) | Net business income on T1 |
| Vehicle expense calculation | Section C of T777 | Chart A on T2125 |
| Lease cost cap (2026) | $1,100/month | $1,100/month |
| Loan interest cap (2026) | $350/month | $350/month |
| GST/HST recovery | Employee rebate via GST370 | Input tax credits on GST/HST return |
If you earn a T4 from an employer, you use T777. If you earn self-employment income and file a T2125, you report vehicle costs there instead. You cannot use both forms for the same vehicle in the same tax year. For the full self-employed path, see self-employed vehicle expenses Canada.
Step-by-Step: Completing Section C Motor Vehicle Expenses
Section C is where the actual calculation happens. Gather your mileage logbook, receipts, and T2200 before you begin.
Part A: Kilometres and Business-Use Percentage
Enter two numbers from your logbook:
- Line 1 — Total kilometres driven in the tax year. This is your full odometer difference from January 1 to December 31.
- Line 2 — Employment kilometres driven. Only trips with a clear business purpose count. Commuting from home to your regular office is personal and must be excluded.
The form divides Line 2 by Line 1 to produce your business-use percentage. This single number controls how much of every expense you can deduct.
Part B: Listing Your Vehicle Expenses
Enter the full-year cost for each eligible category. Do not pro-rate anything yet; the form applies your business-use percentage at the end.
- Fuel and oil — gas, diesel, or electricity charging costs for the full year
- Maintenance and repairs — oil changes, tires, brake pads, mechanical work
- Insurance premiums — your annual auto insurance cost
- Licence and registration — annual plate renewal and any provincial fees
- Leasing costs — monthly lease payments, capped at $1,100/month for 2026 (see lease calculation below)
- Loan interest — interest on a vehicle loan, capped at $350/month for 2026
- Capital cost allowance (CCA) — depreciation for owned vehicles, calculated in a separate schedule on the form
Add all items to get your total vehicle expenses, then multiply by your business-use percentage. The result is your deductible amount, which flows to the T777 summary and then to Line 22900 of your T1 return.
Real Example: Sales Rep Filing T777
Meet Priya, a pharmaceutical sales representative in Ontario who drives her own car to visit clinics and hospitals across the GTA. Here are her 2026 numbers:
- Total km driven: 22,000
- Business km driven: 15,400
- Business-use percentage: 15,400 / 22,000 = 70%
Her full-year vehicle costs:
| Expense | Full-Year Amount |
|---|---|
| Fuel | $4,200 |
| Insurance | $2,400 |
| Maintenance and repairs | $1,800 |
| Licence and registration | $130 |
| Loan interest ($320/mo x 12) | $3,840 |
| Total | $12,370 |
Applying her 70% business-use percentage: $12,370 x 0.70 = $8,659
Priya enters $8,659 on her T777 summary. This flows to Line 22900 of her T1 return. At a combined federal-provincial marginal rate of 37%, the deduction saves her roughly $3,204 in taxes.
Priya tracks every trip with Tripbook, so her logbook already has the date, destination, purpose, and odometer readings the CRA requires. When she sits down to complete Section C, the year-end summary report gives her the exact kilometre totals she needs.
CCA and Lease Cap Rules on T777
Two expense categories have special calculations that trip up many filers.
Capital Cost Allowance (CCA): If you own your vehicle, you claim depreciation instead of a purchase price. The T777 includes a CCA schedule with these classes:
- Class 10.1 — most passenger vehicles: 30% declining balance, $37,000 capital cost limit (2026)
- Class 10 — commercial vehicles and trucks: 30% declining balance, no cap
- Class 54 — zero-emission passenger vehicles: 100% first-year write-off under the Accelerated Investment Incentive, $61,000 cap
The half-year rule reduces CCA by 50% in the year you acquire the vehicle. Your calculated CCA amount is then multiplied by your business-use percentage, just like every other expense on the form.
Lease cost cap: For 2026, the CRA limits deductible lease payments to $1,100 per month (before tax). If your lease is $950/month, you claim the full $950 x 12 = $11,400. If your lease is $1,500/month, you are capped at $1,100 x 12 = $13,200 instead of the $18,000 you actually paid. This cap applies before the business-use percentage is calculated.
Common T777 Errors and How to Avoid Them
Estimating business kilometres. The CRA expects verifiable numbers from a contemporaneous logbook, not a year-end guess. If you are audited and cannot produce trip-level records, the entire deduction can be denied. Tripbook builds your CRA-compliant mileage log automatically, recording every trip as it happens.
Counting commute kilometres as business. Driving from your home to your employer’s regular place of business is personal travel. Only trips beyond your normal commute with a documented work purpose qualify. If you go directly from home to a client site without stopping at the office first, that trip is business, but home-to-office is never deductible.
Forgetting to carry forward CCA. The undepreciated capital cost (UCC) of your vehicle must be carried forward from the prior year. Starting fresh each year overstates your CCA claim and will trigger a reassessment.
Filing without a T2200. No signed T2200 means no T777 claim, period. Request the form from your employer in January so you have it before tax season.
Claiming expenses your employer reimbursed. If your employer paid you a mileage reimbursement for specific costs, those costs must be subtracted from your T777 totals. Double-dipping will result in a reassessment plus interest.
From T777 to Your Tax Refund: Where the Numbers Go
Once you complete Form T777, the total employment expense amount flows to Line 22900 (Other Employment Expenses) on your T1 income tax return. This is a deduction from your employment income, which means it reduces your taxable income directly rather than providing a credit.
The filing steps in order:
- Collect your signed T2200 from your employer
- Complete T777 Section C using your mileage log and receipts
- Transfer the T777 total to Line 22900 of your T1
- If you paid GST/HST on your expenses and your employer is a GST/HST registrant, file Form GST370 to claim the employee rebate on Line 45700
- Keep all records — T2200, logbook, receipts — for six years after filing
You do not attach the T2200 or T777 supporting documents to your return. File electronically through NETFILE or have your tax professional EFILE, and store the originals in case the CRA requests them during a review.
Start Building Your T777 Records Today
Every number on T777 Section C traces back to your mileage logbook. Without it, you cannot calculate your business-use percentage, justify your deduction, or survive an audit. The CRA accepts digital logs, and Tripbook captures every trip automatically with GPS-verified distances and all five required fields: date, destination, purpose, odometer start, and odometer end.
When tax season arrives, export your year-end report and transfer the totals directly into T777 Section C. No manual counting, no missing trips, no audit anxiety.
Download Tripbook for free and start tracking the kilometres that will power your T777 vehicle expense deduction.
