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The CRA’s 2026 mileage rates are 73 cents a kilometre for the first 5,000 business kilometres and 67 cents for each kilometre after that. In Yukon, Nunavut and the Northwest Territories the rates are 4 cents higher, 77 and 71 cents. Employers can use them for a tax-free vehicle allowance, and they rose a cent from 2025.
What are the CRA mileage rates for 2026 and 2025?
Here are both years next to each other, straight from the CRA’s page on automobile allowances.
| Where | Year | First 5,000 km | Each km after |
|---|---|---|---|
| Provinces | 2026 | 73 cents | 67 cents |
| Territories | 2026 | 77 cents | 71 cents |
| Provinces | 2025 | 72 cents | 66 cents |
| Territories | 2025 | 76 cents | 70 cents |
The 73 cents covers the first 5,000 kilometres, then the rate drops. It is a running total across the year, not a rate you get afresh on every trip.
How much is 8,000 kilometres worth?
Take an employee in Ontario who drives 8,000 business kilometres in 2026. The first 5,000 come to $3,650 (5,000 times 73 cents). The remaining 3,000 come to $2,010 (3,000 times 67 cents). The allowance is $5,660.
Push it to 12,000 kilometres and you get $3,650 plus $4,690, or $8,340. In Yukon, Nunavut or the Northwest Territories the 8,000-kilometre case is $3,850 plus $2,130, which is $5,980. Nothing fancy, just two multiplications.
A lighter year is even simpler. Dana in Winnipeg drives 4,000 business kilometres, all of them under the first rate, so it’s 4,000 times 73 cents, or $2,920. No second step needed.
Whatever your total, keep the log that goes with it. A log is what makes the number defensible when an employer, an auditor or you yourself later ask where it came from. A notebook in the glovebox works, or a phone app: date, where you went, why, and the kilometres.
Is the allowance taxable?
Not if it follows the CRA’s conditions.
The allowance may not be taxable if the per-kilometre rate is reasonable and all other conditions are met.
Automobile or motor vehicle allowances, canada.ca
The page lists them: the allowance is based only on business kilometres, the per-kilometre rate is reasonable, and the same use of the vehicle isn’t reimbursed twice. Use a rate lower or higher than the prescribed one and the CRA says it may not be considered reasonable.
A flat monthly allowance that isn’t tied to kilometres is taxable. So is a mix of a flat amount plus a per-kilometre rate for the same driving. And if no record of kilometres is kept, the allowance or reimbursement is generally taxable too. That last point catches people out. An employer can pay exactly the right rate and still create a taxable benefit for lack of a log.
What if my employer pays a different rate?
Ask why. A lower rate may leave you out of pocket for real costs. A higher rate could be treated as taxable. The CRA says a rate above or below the prescribed one may not be reasonable, and that this depends on the facts, such as the vehicle, the driving conditions and local fuel costs. It gives no figure for how far above 73 cents is too far, so we won’t guess one.
If the allowance is taxable, it lands on top of your pay and gets taxed like any other income, so your paycheque shrinks by the tax on it. The take-home pay calculator shows what a pay figure leaves you after tax, and the payroll deductions calculator splits out tax, CPP and EI.
What does a useful mileage log look like?
A log doesn't have to be neat, but it does have to be complete. For each business trip write the date, where you started, where you went, why you went and how many kilometres you drove. Add the odometer reading on the first and last day of the year if you can, since that gives you your total driving and lets you show how much of it was for work. A running page in a notebook is fine, and so is a phone app that exports a list.
The habit that makes a log believable is writing the entry the same day. A log rebuilt from memory in March looks like exactly what it is. If you drive for work every week, a minute at the end of each trip beats an hour of guessing later.
How do you check a year of driving in five minutes?
Add up the business kilometres from your log, split them at 5,000, and price each piece. Say Priya in Calgary logs 9,500 business kilometres in 2026. The first 5,000 are worth $3,650 at 73 cents. The other 4,500 are worth $3,015 at 67 cents. Her allowance should come to $6,665.
Now compare that with what your employer actually paid. A small gap can come from rounding or from a trip that wasn't approved. A large gap is worth a polite question to payroll while the year is still open, because it is much easier to fix in December than after the T4 is issued.
Do these rates apply to my own business?
Not as a flat rate. The 73 and 67 cent figures are set for allowances an employer pays an employee. If you run your own business and use your own car, the CRA’s motor vehicle page for self-employed people describes a different method: add up your actual vehicle costs for the year, then deduct the share that was for business. We found no per-kilometre claim for sole proprietors on that page, so check it before you copy 73 cents into a return.
The CRA expects two numbers in your records: total kilometres driven and kilometres driven to earn income, with the odometer reading at the start and end of the fiscal period. For each trip, note the date, destination, purpose and distance. The share is business kilometres divided by total kilometres.
Here is a made-up year. A freelance designer drives 20,000 kilometres in total, 8,000 of them for clients. Fuel, insurance, repairs and licence cost $9,500. The business share is 8,000 divided by 20,000, which is 40 percent, so $3,800 is deductible. Capital cost allowance is claimed separately, and parking and supplementary business insurance can be deducted in full. Our business car write off guide and the vehicle expenses article go through the details.
What can an employee claim if the employer pays no allowance?
An employee who drives for work and gets no allowance may be able to claim vehicle costs on Form T777, but the CRA sets conditions that all have to be met. You must normally work away from your employer’s place of business or in different places. Your contract must make you pay your own vehicle costs. Your employer must complete and sign Form T2200, and you keep a copy. You also need a log of total kilometres and employment kilometres, and the CRA treats driving between home and work as personal use.
A reimbursement, or turning down a reasonable allowance, usually means you are not treated as having paid the costs yourself. If you received a non-taxable allowance and your real costs were higher, the CRA says you can still claim if you voluntarily add the allowance to your income. Commission earners have one more condition. Read the CRA’s employment expenses guide, or see our home office expenses guide for how a similar claim works.
What should I check on my own allowance?
Three quick questions settle most cases. Is the payment worked out per kilometre? Are the kilometres business ones only? Does someone keep the log? If all three are yes and the rate is the prescribed one or close to it, you’re probably in the clear. If the answer to any is no, ask your payroll department how the amount is treated on your T4.
Common mistakes with mileage allowances
Most problems with vehicle allowances come from a handful of habits that are easy to fix.
- Applying 73 cents to every kilometre. The 73 cents covers only the first 5,000 kilometres, and 67 cents applies after that.
- Counting commuting or personal driving. The allowance is based on business kilometres only.
- Rebuilding the log at year end. Entries made the same day are far more believable.
- Mixing a flat monthly amount with a per-kilometre rate for the same driving. The page above notes this combination is taxable.
- Using the 2025 rates in 2026. The 2026 rates are a cent higher.
If you catch one of these early in the year, it costs a minute to correct. In December it can mean a conversation with payroll about a T4.
A territory example with a long year
Say Tomas works in Yukon and drives 11,000 business kilometres in 2026. The territorial rates are 77 cents for the first 5,000 kilometres and 71 cents after that. The first 5,000 come to $3,850. The other 6,000 come to $4,260 (6,000 times 71 cents). His allowance should be $8,110.
For comparison, the same 11,000 kilometres at the provincial rates would be $3,650 plus $4,020, or $7,670. The $440 difference is the 4 cents extra on each of the 11,000 kilometres. Tomas can compare $8,110 with what his employer paid and ask payroll about any gap while the year is still open.
Where we got these figures
Rates and conditions come from the Canada Revenue Agency’s page on automobile and motor vehicle allowances, which lists 2026 and 2025 and no 2027 rates as of November 2026. The self-employed method is from the CRA’s motor vehicle expenses page, and the employee conditions are from its employment expenses guide. The tax effect of a taxable allowance comes from our 2026 calculators. We aren’t a government service and we don’t speak for one.
To see how a refund or balance owing shifts when income changes, use the tax refund calculator.
Frequently asked questions
What are the 2026 CRA mileage rates?
In the provinces, 73 cents a kilometre for the first 5,000 business kilometres and 67 cents for each kilometre after that. In Yukon, Nunavut and the Northwest Territories, 77 and 71 cents. The CRA page lists these as the prescribed rates for 2026 and shows no figure for 2027 yet.
What were the 2025 rates?
In 2025 the provincial rates were 72 cents for the first 5,000 kilometres and 66 cents after that. In the territories they were 76 and 70 cents. Each 2026 rate is one cent higher. Use the rate for the year the driving happened, not the year you file.
When is a vehicle allowance taxable?
When it is a flat amount not tied to kilometres, when it mixes a flat amount with a per-kilometre rate for the same driving, or when no record of business kilometres is kept. A rate the CRA does not consider reasonable may also be taxable.
Does the lower rate apply per trip?
No. The 73 cents covers the first 5,000 business kilometres you drive in the year, and 67 cents applies to every kilometre after that. It is a running total, so a long year splits into two pieces, for example 8,000 kilometres at $3,650 plus $2,010.
Can I use these rates for my own business?
Not as a flat claim. The rates are for employer allowances. Self-employed people deduct actual vehicle costs multiplied by the business share of kilometres, backed by a log with total and business kilometres. Check the CRA motor vehicle expenses page before you file.
Can an employee claim vehicle costs without an allowance?
Possibly, on Form T777, if all the CRA conditions are met. You must normally work away from the employer's premises, pay your own vehicle costs under your contract, and keep a copy of Form T2200 signed by your employer. A log of total and employment kilometres is needed.
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