For 2026, the mileage allowance rate is $0.73 per kilometre for the first 5,000 kilometres driven in the year, then $0.67 per kilometre after that. In the northern territories, add $0.04 per kilometre. Enter your kilometres below to get the exact amount, tier by tier.
Enter your total business kilometres for the year — the calculation updates as you type.
- First 5,000 km at $0.73
- —
- Additional kilometres: 0 km at $0.67
- —
- Total allowance
- —
This tool is provided for information purposes only. The rate shown is the maximum an employer can pay before the allowance becomes taxable; your own tax situation may differ.
Frequently asked questions
What is the mileage rate for 2026?
The rate is $0.73 per kilometre for the first 5,000 kilometres driven in the year, then $0.67 per kilometre after that.
Why does the rate drop after 5,000 km?
The first-tier rate accounts for the fixed costs of running a vehicle (insurance, registration, depreciation). Once those are covered, the second tier only needs to cover variable costs: fuel, maintenance and wear. That is why it is lower.
Is the rate higher in the territories?
Yes. For travel in Yukon, the Northwest Territories and Nunavut, add $0.04 per kilometre. That supplement applies to both tiers, not just the first one.
What is the difference between an employer reimbursement and a deduction?
An employer can pay an allowance at this rate without it becoming taxable for the employee. A self-employed person receives no allowance: they deduct their actual vehicle costs in proportion to business use. The two situations use different mechanisms.
Do I have to keep a logbook?
Yes. If you are audited, you need to be able to justify every kilometre claimed: date, destination, purpose and distance. An odometer reading at the start and end of the year completes the record.
The 2026 mileage rates
| Kilometres driven | Rate | Northern territories |
|---|---|---|
| First 5,000 km | $0.73/km | $0.77/km |
| Additional kilometres | $0.67/km | $0.71/km |
These rates are set each year by the Department of Finance Canada and prescribed in section 7306 of the Income Tax Regulations. They are announced in late December or early January and apply to the full calendar year.
The $0.04 supplement covers travel in the Yukon, the Northwest Territories and Nunavut. One important detail: it applies to both tiers, not just the first one. That is the most common calculation mistake on this topic.
Why does the rate drop after 5,000 km?
The two-tier structure is not arbitrary. The first-tier rate covers both the fixed costs of running a vehicle — insurance, registration, depreciation — and the variable costs. Those fixed costs do not depend on distance: they are the same whether you drive 3,000 or 30,000 km.
Once those costs are covered by the first 5,000 kilometres, the next tier only has to cover the variable costs: fuel, maintenance, tires, wear. Hence the lower rate.
In practice, for 7,500 business kilometres in 2026:
- 5,000 km × $0.73 = $3,650.00
- 2,500 km × $0.67 = $1,675.00
- Total: $5,325.00
Employer reimbursement or tax deduction?
Both situations use the same rate but different tax mechanisms. Mixing them up is common and expensive at filing time.
You are an employee. Your employer can pay you an allowance calculated at this rate, based on the kilometres actually driven for work. As long as it respects this rate and is based solely on distance, it is not taxable for you. A flat allowance — a fixed monthly amount unrelated to kilometres — is treated as taxable income instead.
You are self-employed. You do not receive an allowance: you deduct your actual vehicle costs in proportion to business use. If 60% of your kilometres are for business, you deduct 60% of your fuel, insurance, maintenance and capital cost allowance. The $0.73 rate does not apply directly to your deduction; it serves as a benchmark, notably to assess whether an allowance you received is reasonable.
Keeping a logbook
If you are audited, you need to be able to justify every kilometre claimed. An acceptable logbook records, for each business trip:
- the date;
- the destination;
- the purpose of the trip (client, supplier, job site);
- the distance driven.
Add an odometer reading on January 1 and December 31: that establishes the annual total and therefore your business-use percentage.
The logbook does not have to be on paper. A note taken the same day, in an app or a spreadsheet, carries the same weight — what matters is that it is contemporaneous with the trip, not reconstructed the following April.
What this calculator does not do
It applies the per-kilometre rate to the tiers in effect. It does not determine:
- whether a given trip is eligible (commuting between home and a regular workplace usually is not);
- the business-use percentage of your vehicle;
- capital cost allowance or the deduction limit that applies to a luxury vehicle.
For those questions, talk to your accountant or consult the official publications.