What is the CRA mileage rate for 2026?

73 cents per kilometre for the first 5,000 business kilometres and 67 cents after that, in the provinces. In the Northwest Territories, Yukon and Nunavut, the rates are 77 and 71 cents. Announced January 14, 2026, effective January 1, 2026.

Is a per-kilometre allowance taxable in Canada?

A per-kilometre allowance is non-taxable when it is based solely on reasonable per-kilometre amounts for actual business driving. Flat monthly car allowances not tied to kilometres are taxable income. Paying both a flat allowance and a per-km amount for the same use generally makes the whole thing taxable.

Is the CRA rate the same in every province?

Yes — Ontario, Quebec, BC, Alberta and all other provinces share the same rate (73¢/67¢ for 2026). Only the three territories get the additional 4 cents per kilometre.

Can self-employed Canadians just claim the per-km rate?

The prescribed rate is designed for employer allowances. Self-employed individuals normally deduct the business-use share of actual vehicle expenses, supported by a logbook. Some use the per-km rate as a simplified estimate, but actual-expense deduction with records is the method the rules contemplate.

Canada · Canada Revenue Agency

CRA mileage rate 2026

Last verified: June 9, 2026 · Source: Department of Finance Canada announcement, January 14, 2026 (effective January 1, 2026)

Provinces · first 5,000 kmCalendar 2026

73¢ / km

Then 67¢/km. Territories: 77¢ then 71¢. Up 1¢ from 2025.

2026 reasonable allowance rates

CRA prescribed automobile allowance rates, 2026 vs 2025
Region	First 5,000 km (2026)	After 5,000 km (2026)	2025 rates
All provinces	73¢	67¢	72¢ / 66¢
NWT, Yukon, Nunavut	77¢	71¢	76¢ / 70¢

The 5,000 km threshold counts business kilometres per employee per calendar year, and the territorial supplement reflects genuinely higher operating costs in the North. One thing the January announcement did not change: the $1,100/month deductible lease ceiling, the $350/month interest deduction limit, and the $61,000 Class 54 CCA ceiling for zero-emission vehicles all carried over unchanged into 2026.

2026 allowance calculator

The 5,000 km tier is applied automatically. Example: 8,000 km in Ontario = (5,000 × 73¢) + (3,000 × 67¢) = $5,660.

What makes an allowance non-taxable

The prescribed rate exists mainly to answer one payroll question: when is a vehicle allowance tax-free to the employee? The CRA's test is that the allowance must be based only on business kilometres actually driven, at a reasonable per-kilometre rate — and the prescribed rate is the benchmark for "reasonable."

The traps are well-worn. A flat $500/month car allowance is taxable, full stop, because it isn't tied to kilometres. Mixing a flat amount with a per-km amount for the same vehicle use generally poisons both. And paying well above the prescribed rate invites the CRA to treat the allowance as unreasonable — meaning taxable. Within the rules, the payment stays off the T4 and free of CPP and EI.

Self-employed? The rate isn't really for you

Sole proprietors deduct the business-use percentage of actual vehicle costs — fuel, insurance, maintenance, licence, depreciation — supported by a kilometre log that splits business from personal driving. The prescribed allowance rate is an employer-payment benchmark, not a self-employment deduction rate. Some self-employed people use it as a back-of-envelope estimate, but if the CRA reviews the return, it will expect actual-expense records. Keep the log either way: date, destination, purpose, kilometres.

Don't confuse this with the NJC kilometric rates

Federal public servants are reimbursed under the National Joint Council travel directive, which publishes different per-kilometre rates by province and updates them quarterly. Those numbers circulate widely and get mistaken for "the CRA rate." For tax purposes — payroll allowances and taxable-benefit decisions — the prescribed rates on this page are the ones that matter.

Common questions

Is the rate different in Ontario, Quebec or Alberta?

No — all ten provinces share the same rate. Only the three territories differ, with their 4¢ supplement.

Does the 5,000 km threshold reset?

Yes, each January 1. It's tracked per employee per year, so an employee who changes vehicles mid-year doesn't get a fresh threshold.

My employer pays 60¢/km. Can I deduct the difference?

Generally not just because it's below the prescribed rate. In limited cases an employee who receives an allowance that is unreasonably low can include it in income and deduct actual expenses instead (with a signed T2200 and full records) — a much heavier path than the UK's simple shortfall relief. Most people in this position are better off renegotiating the rate.

Do electric vehicles get a different rate?

No — the prescribed allowance rate is powertrain-neutral. EV-specific treatment shows up elsewhere (the Class 54 CCA ceiling), not in the per-kilometre rate.

Primary sources

Department of Finance Canada, news release: 2026 automobile deduction limits and expense benefit rates (January 14, 2026), via canada.ca
CRA, Reasonable per-kilometre allowance guidance (employers' guide T4130)

General information, not tax advice. Allowance taxability turns on the details of how a plan is structured — confirm against CRA guidance or a professional before setting payroll policy.