Blog · June 10, 2026

CRA automobile allowance rates for 2026 (with 2024 and 2025)

The per-kilometre rates the CRA treats as reasonable for 2024, 2025 and 2026, what the two tiers mean, and a worked example for 6,200 km.

Every January the Department of Finance announces the per-kilometre rates the Canada Revenue Agency will treat as reasonable for the coming year. The numbers change by a cent or two, which is easy to miss, and the structure behind them is easy to misread. Here is the table, what the tiers mean, and how to turn a year of driving into a dollar figure.

The table

Year	First 5,000 km	Each km after 5,000	Add in the territories
2024	70¢	64¢	4¢
2025	72¢	66¢	4¢
2026	73¢	67¢	4¢

The territories column applies to driving in Yukon, the Northwest Territories and Nunavut. Add 4¢ to both tiers, so 2026 becomes 77¢ and 71¢ there.

What the two tiers mean

The rate is tiered by kilometre, not by month and not by trip. The first 5,000 business kilometres of the calendar year earn the higher rate. Every business kilometre after that earns the lower one. The counter resets on January 1.

That has two practical consequences.

First, your per-kilometre average drops as the year goes on. Someone who drives 20,000 business kilometres does not get 73¢ on all of them. They get 73¢ on the first 5,000 and 67¢ on the remaining 15,000, which averages out to about 68.5¢.

Second, the order of trips matters for monthly figures. If you want to know what March earned, you need to know how many kilometres were already logged in January and February. A log that only records monthly totals can still be priced, but only in date order.

Who the allowance rate is for

This part trips people up. The CRA publishes these rates for employers. Income Tax Regulations section 7306 sets them per person and per taxation year, across one or more cars, as the ceiling on what the employer may deduct, and the CRA treats the same figures as a reasonable tax-free per-kilometre allowance for an employee who uses a personal vehicle for work. If your employer pays you at or below the published rate, based on kilometres you actually drove for work, the allowance is not taxable income. If the employer pays a flat monthly amount with no kilometre basis, or a rate the CRA considers unreasonable, the allowance becomes taxable and the employee may instead deduct actual expenses times the employment-use share on line 22900, with a signed T2200. An employee who receives a reasonable allowance normally cannot deduct anything on top of it.

If you are self-employed, the allowance rate is not your deduction. Self-employed people deduct the business-use share of the actual costs of running the vehicle on form T2125: fuel, insurance, maintenance, licence, interest, capital cost allowance, and so on, with business kilometres over total kilometres as the share. For 2026 the ceilings are $39,000 of capital cost for a Class 10.1 car, $61,000 for a Class 54 zero-emission vehicle, $1,100 a month of lease cost and $350 a month of interest, all before tax. The per-kilometre rate is a useful way to estimate what your driving is worth, and it is what many small businesses use to reimburse contractors, but the deduction itself is built from receipts and a business-use percentage.

So when an app shows you a dollar figure at the CRA rate, read it as an allowance estimate. For an employee it is roughly what a reasonable employer reimbursement would be. For a sole proprietor it is a rough proxy, and the real number comes from your expenses.

A worked example: 6,200 km in 2026

Suppose you log 6,200 business kilometres in 2026, all of it outside the territories.

First 5,000 km at 73¢: 5,000 × 0.73 = $3,650.00
Remaining 1,200 km at 67¢: 1,200 × 0.67 = $804.00
Total: $4,454.00

The same driving in Yukon would be 5,000 × 0.77 plus 1,200 × 0.71, or $3,850 plus $852, for $4,702.

For comparison, the same 6,200 km in 2025 would have been 5,000 × 0.72 plus 1,200 × 0.66, or $4,392. The 2026 increase adds $62 over the year for this driver.

Month by month

If your employer reimburses monthly, each month’s cheque depends on where you are in the 5,000 km tier. Say you drive 1,300 business kilometres a month at a steady pace. January through March are entirely in the first tier at 73¢, or $949 each. April crosses the line: 1,100 km at 73¢ and 200 km at 67¢, for $937. May onward is all second tier at 67¢, or $871.

A log that records each trip with its date makes this arithmetic trivial. A log that was reconstructed from memory at year end makes it a guess.

What the rates do not tell you

The published rate is not a measurement of what driving costs you. It is a policy number. A large truck in a northern winter costs more than 73¢ a kilometre; a small hybrid on highway commutes may cost less. The rate is simply the line the CRA will not question.

The rates also say nothing about which kilometres count. Commuting between home and a regular place of work is personal. Driving from the office to a client, between job sites, or from home to a client when home is your place of business, is generally business. The logbook is what supports that split, and the rate only applies to the kilometres the log supports.

Keep the rate with the year

One last housekeeping point. If you keep a spreadsheet or an app, make sure the rate stored with each trip matches the year the trip happened. A 2025 trip priced at the 2026 rate is a small error, but it is the kind of error that makes an auditor look harder at everything else. Keep the log for six years from the end of the tax year it supports.

Odie carries the CRA table above for 2024, 2025 and 2026 (source canada.ca, checked August 23, 2026), prices each trip at the rate of its date, and applies the tiers in date order so each month’s figure reflects where the year’s counter stood. A Territories switch adds the 4¢, and an override replaces the current year’s rate for an employer that pays a different figure.

Sources

Written by the Odie team. Not tax advice; your accountant knows your situation.