Australia · Australian Taxation Office
ATO cents per kilometre rate 2025–26
All cars · flat rate1 Jul 2025 – 30 Jun 2026
88¢ / km
Capped at 5,000 business km per car — a maximum claim of $4,400.
The ATO held the rate at 88¢ for a second year — a decision tax agents publicly criticised given fuel costs, with at least one prominent accountant calling it a "kick in the teeth." The rate for 2026–27 (from 1 July 2026) hadn't been determined when we last verified this page; we'll update it the day the ATO does.
How the method works
One flat rate covers everything — fuel, rego, insurance, servicing, depreciation. Multiply business kilometres (up to 5,000) by 88¢ and that's the deduction. No receipts, no logbook. The cap is per car, per income year, and it's a hard ceiling: 7,000 business kilometres still yields a 5,000 km claim under this method.
2025–26 deduction calculator
The 5,000 km cap is applied automatically and the calculator tells you when you've hit it. Example: 3,400 km × 88¢ = $2,992.
When the logbook method beats 88¢
The crossover point arrives faster than most people expect. The logbook method lets you claim the business-use percentage of actual car costs — no kilometre cap — at the price of a 12-week logbook recording every trip, plus receipts for the year and odometer readings.
Worked comparison: a consultant drives 8,000 business km in a car that costs $12,000 a year to run, with 70% business use. Cents per km: capped at 5,000 km × 88¢ = $4,400. Logbook: 70% × $12,000 = $8,400. The logbook is worth $4,000 more — every year, since one valid 12-week logbook can support claims for up to five years if usage stays representative. Below roughly 5,000 km in an ordinary car, the flat rate's simplicity usually wins; above it, run the numbers.
Records the ATO expects (yes, even for the "no logbook" method)
"No logbook required" is not "no records required." You need a defensible basis for the kilometres you claim: a diary of work trips, an app log, or a reasonable calculation — a 20 km weekly round trip × 48 working weeks = 960 km is the ATO's own style of example. Claims get cross-checked against odometer readings and patterns; a suspiciously round 5,000 km claim with no supporting basis is a known audit flag. Keep records for five years from lodgment. And the commute doesn't count: home to your regular workplace is private travel, however much equipment is in the boot — the exceptions (bulky-tools cases, home as a genuine base of business) are narrow.
Recent rate history
| Income year | Rate |
|---|---|
| 2025–26 | 88¢ |
| 2024–25 | 88¢ |
| 2023–24 | 85¢ |
| 2022–23 | 78¢ |
| 2020–21 & 2021–22 | 72¢ |
| 2018–19 & 2019–20 | 68¢ |
Common questions
Can two owners of the same car each claim 5,000 km?
Yes — joint owners who use the car for separate income-producing purposes can each claim up to 5,000 work-related kilometres, per the ATO's own guidance.
Can I switch methods between years?
Yes. You can use cents-per-km one year and the logbook method the next; you can even choose differently for different cars in the same year. What you can't do is claim fuel receipts on top of the cents-per-km rate — the rate already includes running costs.
Does my employer have to reimburse at 88¢?
No — employer reimbursement is a workplace matter (awards and agreements often set their own per-km amounts). The 88¢ figure is the tax-deduction rate. If your employer reimburses you, you generally can't also deduct the same kilometres.
Primary sources
- ATO, Cents per kilometre method
- Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination — LI 2024/19
General information, not tax advice. Method choice can move real money — when in doubt, run both calculations or ask a registered tax agent.