CRA Mileage Rate 2026: Complete Guide for Canadians Who Drive for Work
Dec 22, 2025
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The CRA mileage rate (also called the automobile allowance rate) is one of the easiest, most powerful ways to get money back for business driving—but only if you use it correctly and keep a clean mileage log. As 2026 approaches, many employees, self‑employed Canadians, and small business owners are asking the same question: What will the CRA mileage rate be, and how do I make sure I don’t leave money on the table?
This guide explains how the CRA mileage rate works, what is known and expected for 2026, who can use it, and how automatic tracking with Fuelshine makes claiming your full deduction almost effortless.
1. What Is the CRA Mileage Rate?
The CRA mileage rate is the per‑kilometre amount the Canada Revenue Agency considers a “reasonable” tax‑free allowance when an employer reimburses an employee for business use of a personal vehicle.
Instead of reimbursing every gas receipt, parking ticket, oil change, and repair separately, an employer can simply pay a per‑km allowance using the CRA rate. If that allowance is at or below the prescribed rate and meets CRA conditions, it is not taxable income for the employee.
The CRA mileage rate is meant to cover the all‑in cost of operating a vehicle for work, including:
Fuel and oil
Maintenance and repairs
Insurance and registration
Tires and routine wear
A portion of financing, depreciation, or lease costs
The CRA reviews and adjusts this rate annually based on the evolving real cost of owning and operating a car in Canada.
2. Current Rates (2025) and What to Expect for 2026
At the time of writing, the official 2026 mileage rate has not yet been released, but CRA’s pattern and current guidance give a strong indication of what to expect.
2025 CRA Mileage Rate (Confirmed)
For 2025, the CRA prescribed automobile allowance rates are:
$0.72 per km for the first 5,000 km of business travel
$0.66 per km for each kilometre after 5,000 km
Plus $0.04 per km in the Northwest Territories, Yukon, and Nunavut
These 2025 rates are 2 cents higher than 2024, reflecting persistent pressure from fuel, insurance, and vehicle costs.
Expected CRA Mileage Rate for 2026
Historically, CRA announces the mileage rate for the upcoming year in late December, with new rates effective January 1. Several 2026‑focused resources currently estimate that the rate is likely to increase again slightly, for example to the range of $0.74 per km for the first 5,000 km and $0.68 per km thereafter, although these numbers remain estimates until CRA publishes its official release.
Until the official 2026 announcement is made, the most practical approach is to:
Use the 2025 rates for planning and budgeting.
Watch for the CRA news release or updated kilometric rates page in late December 2025.
Make sure your 2026 mileage log is accurate from January 1 onward, regardless of the final per‑km values.
3. Who Can Use the CRA Mileage Rate?
The CRA mileage framework applies differently to employees, self‑employed individuals, and employers.
Employees Receiving a Car Allowance
If you are an employee who uses a personal vehicle for work and your employer pays you a per‑km car allowance:
The allowance is not taxable if:
It is based solely on the number of business kilometres driven.
The per‑km rate is at or below the CRA prescribed rate.
You do not receive any other taxable vehicle benefit for the same driving.
Your employer can deduct the allowance as a business expense.
If your allowance is a flat monthly amount or is higher than CRA’s reasonable rate, part or all of it may be taxable and must be included on your T4.
Self‑Employed & Small Business Owners
If you are self‑employed, you generally do not “use” the CRA mileage rate as reimbursement but instead claim actual motor vehicle expenses based on the percentage of business use. That means:
Track total kilometres driven in the year.
Track business kilometres separately.
Calculate your business‑use percentage, for example:
20,000 total km; 12,000 business km → 60% business use.
Apply that percentage to allowable expenses such as fuel, insurance, repairs, leasing, interest (with limits), and CCA.
The CRA mileage rate still matters, because it acts as a benchmark for what is “reasonable” and is often used when employers reimburse incorporated owners or family employees.
Employers and Fleet‑Using Businesses
Employers can use the CRA mileage rate to:
Pay tax‑free car allowances to employees using personal vehicles.
Avoid the complexity of managing and tracking corporate vehicles, standby charge, operating cost benefits, and taxable‑benefit calculations.
Simplify payroll and T4 reporting, as properly structured allowances at CRA rates don’t need to be reported as income.
For companies running distributed sales teams, service technicians, or delivery staff, the CRA mileage rate can be the simplest way to compensate driving without owning the vehicles.
4. CRA Mileage Rate vs. Actual Vehicle Expenses
There are two main ways to handle business driving with the CRA:
Method 1 – Mileage Allowance (Employees)
Employer pays per‑km using CRA rate.
Employee gets tax‑free reimbursement if conditions are met.
Employer deducts the allowance as an expense.
Method 2 – Actual Expenses (Self‑Employed or No Allowance)
Driver logs total and business kilometres all year.
Tracks actual expenses (fuel, insurance, repairs, etc.).
Claims the business‑use percentage of those costs on their return.
Which is better?
Employees typically prefer a CRA‑rate allowance: it is simple, tax‑free, and avoids complex tracking on their personal returns (beyond verifying business use if needed).
Self‑employed individuals often get the best result by claiming actual expenses with a strong mileage log, especially when business use is high and vehicles are more expensive.
Either way, accurate mileage tracking is non‑negotiable—without dates, start/end locations, business purpose, and kilometres, CRA can deny your deduction or reclassify allowances as taxable.
5. Record‑Keeping Rules: What CRA Expects in Your Log
The CRA is clear: no log, no deduction (or at least, no reliable one). A compliant mileage log should capture:
For each business trip:
Date
Starting point and destination
Purpose of the trip (client visit, delivery, job site, etc.)
Number of kilometres driven
For the year overall:
Odometer reading at January 1
Odometer reading at December 31
Total kilometres driven
Total business kilometres
If you are self‑employed or claiming actual expenses, this log supports your business‑use percentage, which CRA audits frequently because vehicle costs are a common deduction.
Paper logbooks technically work, but they’re extremely easy to forget, mis‑total, or lose. Many Canadians only realize they’re missing data when tax time arrives—and at that point it’s too late to reconstruct a precise log.
6. How Much Is the CRA Mileage Rate Worth in Dollars?
Using the 2025 rate as a baseline, here’s what the CRA mileage rate can mean in real money.
Example 1: Employee Driving 8,000 km for Work
First 5,000 km at $0.72/km → $3,600
Remaining 3,000 km at $0.66/km → $1,980
Total 2025 allowance: $5,580 tax‑free
If the 2026 rate rises slightly (for example, to an estimated $0.74/$0.68 range), the same driving might generate roughly $5,800+ in allowances.
Example 2: Self‑Employed Consultant – 60% Business Use
Total km in 2026: 25,000
Business km: 15,000 (60%)
Total vehicle expenses:
Fuel: $3,000
Insurance: $1,600
Maintenance/repairs: $800
Registration/fees: $300
Lease payments (within CRA limits): $6,000
Total: $11,700
Business‑use claim at 60% = $7,020 deductible against business income. If the log is incomplete or unreliable, CRA can reduce or deny this deduction.
In both cases, every kilometre you track correctly translates into real dollars at tax time.
7. Why Automatic Tracking Beats Manual Logs
Most Canadians who under‑claim vehicle deductions or run into CRA issues have one thing in common: poor records.
Common problems include:
Reconstructing mileage from memory at year‑end.
Forgetting to log smaller trips (which add up quickly).
Mixing personal and business trips with no clear documentation.
Spreadsheet totals that don’t match odometer readings.
Automatic mileage tracking apps like Fuelshine solve these pain points by capturing trips in real time, classifying them, and generating CRA‑ready reports.
With Fuelshine you can:
Automatically detect trips using your phone’s GPS—no need to start/stop manually.
Classify trips as business or personal.
See monthly and annual totals for business kilometres.
Export CRA‑compliant mileage reports with dates, routes, distances, and totals ready for your accountant or tax software.
Instead of scrambling in March, you log as you drive and arrive at tax season already prepared.
8. How Fuelshine Maximizes the Value of CRA Mileage Rates
Fuelshine goes beyond simple trip logging by combining automatic mileage tracking with fuel‑efficiency coaching and eco‑driving rewards tailored to everyday drivers and small fleets.
Here’s how it helps you get the most out of CRA mileage rules:
Capture 100% of eligible kilometresEvery work trip is recorded in the background. You classify and tag them in seconds, ensuring no lost kilometres—and no missed tax savings.
Support both methods: allowance and actual expensesWhether you’re an employee verifying kilometres behind a tax‑free allowance, or self‑employed calculating business‑use percentage, Fuelshine gives you precise, exportable logs.
Defend your deduction in case of auditDetailed, timestamped logs with start/end points and kilometre totals make it much easier to substantiate your claim if CRA ever asks questions.
Reduce your actual fuel spend while you trackReal‑time coaching on speeding, harsh braking, and idling can cut fuel use by 5–13%, which effectively increases the net benefit of each kilometre you drive for work.
Earn rewards for efficient drivingEco‑driving behavior can generate points that convert into real rewards like fuel or gift cards, putting even more money back in your pocket on top of CRA deductions.
9. Step‑by‑Step: Using the CRA Mileage Rate with Fuelshine in 2026
Download FuelshineInstall the app on Android device and create your account. Trip detection runs automatically in the background as you drive.
Start January 1 with a clean odometer readingNote your odometer or snap a photo inside the app to set a clear starting point for 2026.
Drive as usual—Fuelshine logs every tripThe app detects your trips automatically and records the distance, route, and time.
Classify trips as business or personalAt the end of the day or week, quickly classify trips. Add short notes (client names, purpose) for extra clarity.
At year‑end, export your CRA mileage reportGenerate a 2026 mileage summary showing total km, business km, and a detailed trip log you can hand to your accountant or attach to your records.
Apply the official 2026 CRA rateOnce CRA announces the final 2026 rate (usually late December 2025), you or your employer can use the per‑km amounts to calculate tax‑free allowances or deductible expenses.
10. Key Takeaways for 2026
The official CRA mileage rate for 2026 will be released in late December 2025, but you can safely use the 2025 rate (72¢/66¢) for planning now.
Employees can receive tax‑free allowances when employers pay at or below the CRA rate and follow the rules.
Self‑employed individuals generally benefit from claiming actual expenses using a strong mileage log and business‑use percentage.
CRA expects detailed, contemporaneous mileage records; reconstructing logs from memory is risky and often challenged.
Automatic tracking with Fuelshine ensures you capture every eligible kilometre, defend your deductions, and even lower your actual fuel costs while you drive.
Download Fuelshine Before You Drive Another Kilometre
If you drive for work in Canada—whether as a sales rep, contractor, consultant, gig driver, or small‑business owner—the CRA mileage rate in 2026 represents real money you shouldn’t leave on the road.
But the rate only helps you if you can prove your kilometres.
Fuelshine gives you:
Automatic mileage tracking for every business trip.
CRA‑ready reports you can use at tax time.
Real‑time coaching to cut fuel use by up to double‑digit percentages.
Eco‑driving rewards that turn safe, efficient driving into extra value.
Don’t wait until tax season to realize you missed hundreds or thousands of dollars in deductions.
Download Fuelshine today and make every kilometre you drive in 2026 count—both at the pump and on your tax return.
