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CRA automobile allowance rates 2026: 73¢ and 67¢
The per-kilometre rates the CRA treats as reasonable for 2024, 2025 and 2026, what the two tiers mean, who they apply to, and a worked example for 6,200 km.
A home-care nurse in Hamilton drives her own car between patients and logs 1,300 work kilometres in January 2026. Her employer pays the CRA rate: 1,300 km × 73¢ = $949, not taxable because it is a reasonable per-kilometre allowance. Once her year passes 5,000 km, in April, each kilometre pays 67¢.
Every January the Department of Finance announces the rates the Canada Revenue Agency will treat as reasonable. They change by a cent or two, and the tiers are 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. We compare the two in employee allowance or self-employed deduction; the log a sole proprietor needs is on our page for the self-employed.
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. The mileage calculator runs the same tiers on your own kilometres.
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.
Odie records that dated log as you drive: it starts and ends each trip by itself, keeps the date, route and distance, and asks Work or Personal from the lock screen. Each work trip is priced at the rate of its date, with the tier counter running per calendar year. Trips stay on your phone and your own private iCloud, and none of it is sent to us.
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.
2026 ceilings for vehicle deductions
The same Finance Canada release sets the limits that apply when actual costs are claimed in 2026, before tax.
| Limit | 2026 |
|---|---|
| Capital cost allowance, Class 10.1 passenger vehicle | $39,000 |
| Capital cost allowance, Class 54 zero-emission vehicle | $61,000 |
| Deductible leasing cost, per month | $1,100 |
| Deductible loan interest, per month | $350 |
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. The sample year report shows the Allowance line as it prints.
Questions
Is a mileage allowance taxable in Canada?
Not when it is a reasonable per-kilometre allowance: at or below the CRA rate (73¢ for the first 5,000 km and 67¢ after, in 2026) and based on kilometres actually driven for work. A flat monthly amount with no kilometre basis is taxable, and the employee may then deduct actual expenses times the employment-use share on line 22900, with a signed T2200.
Can self-employed people deduct the CRA per-km rate?
No. Self-employed people deduct car costs × business share on Form T2125 (fuel, insurance, maintenance, licence, interest, capital cost allowance), with business kilometres over total kilometres as the share. The per-kilometre rate is only a way to estimate what the driving is worth; the two are compared in employee allowance or self-employed deduction.
Does the 5,000 km allowance tier reset every year?
Yes. The first 5,000 business kilometres of each calendar year earn 73¢ in 2026, every kilometre after earns 67¢, and the counter resets on January 1. Over 20,000 business kilometres that averages about 68.5¢.
Is the CRA mileage rate different in Ontario, Quebec or another province?
No. The 2026 allowance rate is 73¢ for the first 5,000 km and 67¢ after in every province; only Yukon, the Northwest Territories and Nunavut add 4¢. Quebec uses the same figures: Revenu Québec's 2026 limits and rates set the tax-exempt allowance at $0.73 and $0.67 per km. The rates for medical and moving travel do change by province: see CRA travel rates by province.
Is there a PDF of the CRA mileage rates?
The CRA publishes the rates on its automobile allowance rates page, and Finance Canada announces each year's figures in a news release. If what you need on paper is the log itself, the mileage log template comes as a printable PDF with the CRA columns.
Sources
- CRA: Automobile allowance rates
- CRA: Reasonable per-kilometre allowance
- CRA: Motor vehicle expenses (T2125)
- CRA: Allowable motor vehicle expenses, salaried employees (line 22900)
- Income Tax Regulations, s. 7306
- Finance Canada: 2026 automobile deduction limits and expense benefit rates
- Revenu Québec: Limits and rates related to the use of an automobile for 2026
Every figure above is checked against the sources listed. How we check our facts. Not tax advice; your accountant knows your situation. Spotted an error? Tell us.
