In short: record the date, destination, purpose and kilometres of every business trip, and your odometer at the start and end of the year. Self-employed people deduct the business-use share of actual vehicle costs on T2125. Employees with a signed T2200 claim on T777. The 73¢/67¢ per-km rates are for employer allowances.
CRA automobile allowance rates 2026 and 2025
| Year | Region | First 5,000 km | Each km after |
|---|---|---|---|
| 2026 | Provinces | $0.73 | $0.67 |
| 2026 | Yukon, NWT, Nunavut | $0.77 | $0.71 |
| 2025 | Provinces | $0.72 | $0.66 |
| 2025 | Yukon, NWT, Nunavut | $0.76 | $0.70 |
These are the reasonable per-kilometre rates the CRA uses for tax-free allowances that employers pay employees. They are not a deduction rate for self-employed people.
Self-employed: business-use percentage of actual costs
On Form T2125 you deduct (business km / total km) x your total vehicle expenses: fuel and oil, electricity for a zero-emission vehicle, insurance, licence and registration, maintenance and repairs, interest on the car loan and leasing costs. Capital cost allowance is calculated separately.
Example: 9,890 business km out of 21,500 total km is 46.0%. If your vehicle costs for the year were $9,200, you deduct 46.0% x $9,200 = $4,232, plus the business share of capital cost allowance.
For 2026 the limits are $39,000 (before tax) for capital cost allowance on passenger vehicles bought on or after January 1, 2026, $61,000 for zero-emission vehicles, $350 a month for interest on new car loans and $1,100 a month for new leases.
Employees: T777 and T2200
If your employment contract requires you to pay your own vehicle expenses and your employer signs Form T2200, you can claim the employment-use share of your costs on Form T777. Your logbook shows that share. Any non-taxable allowance you received reduces or rules out the claim.
Keeping the log for less than a full year
After one full base year, the CRA accepts a three-month sample logbook in later years if your business use stays within 10% of the base year. The simplified logbook calculator does the formula for you.
Sources
- CRA: Motor vehicle records (logbook and simplified logbook)
- CRA: Motor vehicle expenses for self-employed people
- CRA: Automobile allowance rates (2026 and 2025)
- Department of Finance Canada: 2026 automobile limits and rates (Jan. 14, 2026)
- CRA: How long to keep your records
Rates and rules on this page last checked against these sources on October 7, 2026.