CRA Mileage Rates 2026: What Canadian Drivers Can Claim
The Canada Revenue Agency has announced its 2026 automobile allowance rates, and Canadian drivers using their personal vehicles for business can now claim 73 cents per kilometre for their first 5,000km of annual business travel. Here's everything you need to know about maximising your mileage deductions this year.
Quick Summary:
- 73¢/km — CRA rate for first 5,000km of business driving in 2026
- 67¢/km — Rate for additional kilometres beyond 5,000km annually
- 4¢/km extra — Additional allowance for driving in Canada's territories
What Are CRA Mileage Rates?
CRA mileage rates are annual vehicle allowance rates that employers use to reimburse employees for business use of their personal vehicles. These rates cover all vehicle-related costs, including fuel, maintenance, insurance, and depreciation.
For 2026, the CRA has set the automobile allowance rate at 73 cents per kilometre for the first 5,000 kilometres driven and 67 cents per kilometre for all subsequent travel. This represents a 1-cent increase from the 2025 rates, reflecting ongoing adjustments for inflation and rising vehicle costs.
2026 CRA Mileage Rates Breakdown
The tiered structure means you'll claim different rates depending on your annual business mileage:
| Region | First 5,000 Kilometres | Each Additional Kilometre |
|---|---|---|
| Provinces | $0.73 / km | $0.67 / km |
| Territories (NT, YT, NU) | $0.77 / km | $0.71 / km |
An additional 4 cents per kilometre is permitted for travel in the Northwest Territories, Yukon, and Nunavut to account for higher operating costs in Canada's north.
How CRA Rates Have Changed Over Time
Understanding the rate progression helps put 2026's increases in context:
| Year | First 5,000 km (Provinces) | Over 5,000 km (Provinces) |
|---|---|---|
| 2026 | $0.73 / km | $0.67 / km |
| 2025 | $0.72 / km | $0.66 / km |
| 2024 | $0.70 / km | $0.64 / km |
The CRA revises these rates annually based on factors such as fuel prices, inflation, vehicle depreciation, and maintenance costs. While the 1-cent increase might seem modest, it reflects the agency's commitment to keeping pace with rising vehicle operating expenses.
Who Can Use These Rates?
The CRA's automobile allowance rates apply to all personal vehicles used for business purposes, regardless of fuel type—including gasoline, hybrid, or fully electric vehicles. However, it's important to understand how they apply to different employment situations.
Employee Reimbursements: Employers use these rates to reimburse employees for business travel. Payments made within these CRA limits are not considered a taxable benefit, and employers can deduct the full amount as a business expense.
Important Note for Self-Employed Drivers: Self-employed individuals cannot directly use the CRA mileage rates as a flat deduction for vehicle expenses. Instead, they must claim actual vehicle expenses proportionate to business use. While some sole proprietors use a simplified logbook method for tracking kilometres, the CRA can still require actual receipts during an audit — making thorough record-keeping essential for freelancers and small business owners.
What's Covered (and What Isn't)
The CRA mileage rates are designed to be comprehensive, covering most vehicle-related expenses. However, there are important exclusions to remember.
Included in the Rate:
- Fuel costs
- Regular maintenance and repairs
- Insurance premiums
- Vehicle depreciation
- Licensing and registration fees
Not Included:
- Tolls and parking fees (calculate these separately)
- Traffic violation fines
- Personal use of the vehicle
Tolls and parking are not included in the CRA mileage rate and should be calculated separately when submitting expense claims.
Record-Keeping Requirements
For an allowance to be tax-free, strict documentation requirements must be met. A logbook detailing the date, distance, and reason for business travel must be kept, and the allowance must be strictly for business activities calculated using the reasonable CRA rate.
Your mileage log should include:
- Date of each business trip
- Starting and ending locations
- Total kilometres driven
- Business purpose of the trip
- Odometer readings (recommended)
Modern mileage tracking apps like MileEZ can automatically capture this information, ensuring you meet CRA requirements without the hassle of manual logbooks.
Employer Flexibility and Rate Variations
Employers are not legally obliged to use the CRA rates and may choose to reimburse employees at different rates. However, deviating from CRA guidelines can have tax implications.
If employers pay more than CRA rates:
- Excess amounts become taxable benefits for employees
- Additional tax implications may apply
If employers pay less than CRA rates:
- Employees may be able to claim the difference as a deduction
- Proper documentation becomes even more critical
Maximising Your Mileage Claims
To get the most from your business driving deductions, consider these strategies:
Track Every Business Trip: Even short trips to the post office or client meetings add up. With rates at 73¢/km, a 10km round trip is worth $7.30 in deductions.
Plan Efficient Routes: Combining multiple business stops in one trip maximises your per-kilometre claims while reducing overall driving time.
Separate Business and Personal Use: Keep clear records distinguishing between business and personal driving. Only business kilometres qualify for CRA rate reimbursements.
Use Technology: GPS-based mileage tracking eliminates guesswork and provides the detailed logs CRA requires. Automatic classification of trips as business or personal streamlines your record-keeping process.
Check how much you could save with our free mileage calculator tailored for Canadian tax regulations.
What to Expect in Future Years
The Department of Finance typically announces new rates in late December of the preceding year — for example, the 2026 rates were officially released on December 19, 2025. Rate adjustments generally reflect:
- Fuel price fluctuations
- General inflation rates
- Vehicle depreciation trends
- Insurance cost changes
- Maintenance expense inflation
Given ongoing economic pressures, modest annual increases similar to 2026's 1-cent bump are likely to continue in future years.
Common Mistakes to Avoid
Even with clear CRA guidelines, several common errors can reduce your mileage deductions or create compliance issues:
Inadequate Documentation: Failing to maintain detailed trip logs is the most frequent mistake. CRA audits focus heavily on mileage documentation quality.
Mixing Personal and Business Trips: Including personal driving in business mileage claims can trigger penalties. Keep these separate in your records.
Ignoring the Two-Tier Structure: Remember that rates drop after 5,000km annually. Budget accordingly if you're a high-mileage driver.
Forgetting Additional Expenses: Don't overlook separately claimable items like parking and tolls, which aren't covered by the per-kilometre rate.
Track every kilometre with MileEZ
Managing CRA-compliant kilometre records doesn't have to be complicated. MileEZ automatically detects your business trips, calculates exact distances, and generates tax-ready reports that meet CRA documentation requirements. Whether you're an employee seeking reimbursement or self-employed tracking actual vehicle expenses, MileEZ keeps your kilometres organised and your deductions maximised.
Our Canadian tax calculator shows exactly how much you could save, while automatic trip classification ensures you never miss a deductible business kilometre. With 2026's increased rates, every kilometre counts more than ever.