Canadian · Vehicles
CRA vehicle mileage rate.
The CRA sets a per-kilometre rate it considers a reasonable, tax-free allowance for driving your own vehicle on the job — higher for the first 5,000 km, lower after, and higher again in the territories.
For 2026, CRA's prescribed rate is $0.73/km for the first 5,000 business km and $0.67/km after that in the provinces — $0.77/km and $0.71/km in the territories (Yukon, Northwest Territories, Nunavut), which get an extra 4¢/km throughout.
Inputs
Reasonable allowance
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2026 rate, by tier
| Region | First 5,000 km | Each additional km |
|---|---|---|
| All 10 provinces | $0.73/km | $0.67/km |
| Yukon, NWT, Nunavut | $0.77/km | $0.71/km |
What this rate actually governs
An employer-paid per-km allowance for using a personal vehicle at work is tax-free to the employee only if it is reasonable — based strictly on business kilometres, and paid instead of (not on top of) actual expense reimbursement. CRA publishes this rate as the benchmark: pay at or near it and the allowance is presumed reasonable and non-taxable; pay well above it and CRA can treat the excess as a taxable benefit. It applies to the employer-allowance side of vehicle expenses under the Income Tax Act, not to the separate CRA per-km rate self-employed people use to claim actual vehicle expenses on their own return, which follows different rules entirely.
Source, read 29 September 2026 (fetched directly from the CRA's own page): canada.ca — Canada Revenue Agency, "Automobile and motor vehicle allowances," Payroll › Benefits and allowances section, prescribed under Income Tax Regulation 7306. Rates are set annually; recheck canada.ca each January for the current year's figures before relying on this for a new tax year.
Frequently asked questions
Does my employer have to pay exactly this rate?
No. This is CRA's benchmark for what counts as "reasonable," not a legal minimum or maximum. An employer can pay less (or more, with justification) — paying noticeably above it is what risks CRA treating the allowance as a taxable benefit.
Does the 5,000 km threshold reset every year?
Yes. The higher first-tier rate applies to the first 5,000 business km driven in the calendar year for that employment; any additional business km in the same year use the lower rate.
Is this the same rate self-employed people use?
Not exactly the same context. This is the CRA benchmark for an employer's allowance to an employee. Self-employed individuals and employees claiming actual vehicle expenses instead of an allowance track real costs (fuel, insurance, maintenance, depreciation) and prorate by business-use percentage, rather than applying a flat per-km rate.
Why do the territories get a higher rate?
CRA has long set a flat 4¢/km premium for Yukon, the Northwest Territories, and Nunavut on both tiers, reflecting the higher real cost of operating and fuelling a vehicle in the territories.
Estimate only — confirm the current year's rate
This tool applies the rate CRA has published for 2026. CRA revises this rate periodically (it has changed most years recently), so if you are looking at a different tax year, confirm the exact figure on canada.ca before relying on it for payroll or a tax filing.