CRA kilometre rates for 2026
| Where | First 5,000 km | Each additional km |
|---|---|---|
| Provinces | $0.73 | $0.67 |
| Yukon, Northwest Territories, Nunavut | $0.77 | $0.71 |
The 5,000 km split resets every calendar year. These rates are the most an employer can deduct for tax-exempt allowances, and allowances paid at or below them are normally treated as reasonable, so they aren't added to the employee's income.
Worked example
An employee in Ontario drives 5,000 + 7,000 = 12,000 business kilometres in 2026. The tax-free limit is 5,000 × $0.73 plus 7,000 × $0.67 = $8,340.00, an average of about $0.695 per km.
Employees vs self-employed
The per-kilometre rates are for allowances employers pay employees. If you are self-employed, you don't claim a per-km rate. You deduct your actual vehicle costs, such as fuel, insurance, maintenance, interest and capital cost allowance, multiplied by the share of kilometres that were for business, backed by a logbook. Employees who get no allowance, or an unreasonably low one, may be able to claim actual expenses with a signed T2200 from their employer.
If your employer provides the vehicle instead, a different rule applies: the taxable benefit for personal use includes an operating cost benefit of $0.34 per personal kilometre in 2026.
Frequently asked questions
What is the CRA mileage rate for 2026?
73 cents per kilometre for the first 5,000 business kilometres and 67 cents for each kilometre after that. In the Yukon, Northwest Territories and Nunavut it is 77 and 71 cents.
Is a mileage allowance taxable?
A reasonable allowance based only on business kilometres driven is generally not taxable to the employee. The CRA rates are the limit an employer can deduct for tax-exempt allowances, and allowances at those rates are normally treated as reasonable.
Can self-employed people use the CRA per-km rate?
Not as a deduction method. Self-employed people deduct actual vehicle expenses, such as fuel, insurance, maintenance and capital cost allowance, multiplied by the business-use share of kilometres from a logbook. The per-km rates apply to employer allowances.
Does the 5,000 km limit reset each year?
Yes. The higher rate applies to the first 5,000 business kilometres driven in each calendar year, then the lower rate applies.
What records do I need for a mileage allowance?
A logbook of business trips showing the date, destination, purpose and kilometres driven. The allowance must be based on those kilometres.
Sources
Rates: Department of Finance Canada, 2026 automobile deduction limits and expense benefit rates. Allowance rules: CRA, allowances for the use of an employee's own vehicle. Checked every week against official Government of Canada pages; last confirmed 2026-09-29.