Every year the CRA publishes the automobile allowance rates — the per-kilometre amounts employers can reimburse tax-free. For 2026, the rates are 73 cents per kilometre for the first 5,000 kilometres and 67 cents for each kilometre after (plus 4¢/km in the territories).
The rates rose 2¢ from 2025. They are designed to approximate the all-in cost of operating a vehicle — fuel, insurance, depreciation and maintenance — and they double as the benchmark gig drivers and small businesses use to value their driving.
What the rates are worth
| Business km/year | Reimbursement |
|---|---|
| 5,000 | $3,650 |
| 10,000 | $7,000 |
| 20,000 | $13,700 |
| 30,000 | $20,400 |
First 5,000 km at 73¢ = $3,650; each additional km at 67¢. Territories add 4¢/km.
Employees: allowance vs. actual expenses
If your employer reimburses at (or below) the CRA rate with proper records, the allowance is tax-free and you cannot also claim vehicle expenses. If you are not reimbursed, you may deduct actual vehicle expenses (with a signed T2200) — but not the per-km rate itself; employees must use actual costs. Keep a logbook: the CRA requires it, and "I drive a lot for work" is not documentation.
Gig drivers and the self-employed
Self-employed drivers (Uber, DoorDash, couriers, tradespeople) deduct actual expenses pro-rated by business-use percentage: fuel, insurance, maintenance, lease/finance costs (within CRA limits), and CCA depreciation. The 73¢/67¢ rates are still useful as a sanity check — if your actual per-km cost wildly exceeds them, something is off; if a gig pays less per km than your true cost, you are losing money. Track kilometres per shift, every shift.
Logbook discipline: date, destination, purpose, start/end odometer. Apps automate it; a notebook works too. The CRA routinely asks for logbooks in vehicle-expense reviews — no logbook, no deduction.
Frequently asked questions
What is the CRA mileage rate for 2026?
73 cents per kilometre for the first 5,000 km and 67 cents per km after, effective January 1, 2026 (plus 4¢/km in the territories).
Is a car allowance at the CRA rate taxable?
No — allowances at or below the CRA prescribed rates, properly documented, are received tax-free by employees.
Can gig drivers use the CRA mileage rate?
Self-employed drivers deduct actual expenses (not the per-km rate), but the 73¢/67¢ figures are a useful benchmark for whether gigs cover your true driving costs.
Do I need a logbook for vehicle expenses?
Yes — the CRA requires a logbook (date, destination, purpose, odometer readings) to support any vehicle expense claim or tax-free allowance.
Sources and methodology
- CUPW: CRA Automobile Allowance Rates 2026
- Inspired Travel Group: 2026 Mileage and Auto Allowance Rates in Canada
- Bloomberg Tax: Canada Announces 2026 Automobile Deduction Limits
This article provides general information for planning purposes, not professional advice or a quote. Cost figures are NorthPeak planning estimates unless a source is named; confirm current prices with licensed local contractors and professionals before making decisions.