Business use: 80.0%
Total Deduction
$8,220.00
Estimated Tax Savings
$2,437.23
Business Kilometres
12,000 km
Combined Marginal Rate
29.6%
What are the 2025 CRA mileage rates?
For 2025, CRA allows employers to pay a reasonable per-kilometre allowance of $0.72 for the first 5,000 business kilometres and $0.66 for each additional kilometre. In the Northwest Territories, Yukon, and Nunavut, there is an additional $0.04 per kilometre. These rates are used by employers for non-taxable vehicle allowances and by employees claiming vehicle expenses.
What logbook requirements does CRA have?
CRA requires you to keep a detailed vehicle logbook recording the date, destination, purpose, and kilometres for each business trip. You must also record your odometer reading at the start and end of the year. Without a logbook, CRA may deny your vehicle expense claim entirely. A full-year logbook is required in the first year; afterward, a representative 3-month sample may be accepted.
What is a "reasonable allowance" for CRA purposes?
A reasonable allowance is one based solely on business kilometres driven using a per-kilometre rate. If the allowance is reasonable, it is not included in your income (tax-free). If your employer pays a flat monthly car allowance, it is considered unreasonable by CRA and must be included in your income -- but you can then claim actual vehicle expenses on your tax return.
What is a T2200 form and do I need one?
Form T2200 (Declaration of Conditions of Employment) is signed by your employer confirming that you are required to pay vehicle expenses as a condition of employment. You need this form to claim vehicle expenses on your tax return (Line 22900). Without it, you cannot deduct vehicle expenses. Your employer is required to complete it upon request if you meet the conditions.
Can I claim the CRA rate or actual expenses?
As an employee, you can claim actual vehicle expenses (gas, insurance, repairs, depreciation) prorated by business use percentage, or use the simplified per-kilometre method. Self-employed individuals can also choose between actual expenses and the CRA rate. The CRA rate method is simpler but may not reflect your actual costs if you drive an expensive vehicle or have high maintenance costs.
CRA-Aligned: Mileage rates based on CRA's 2025 prescribed rates. Keep a detailed logbook to support your claim.
How to claim vehicle expenses for business driving
What are the CRA mileage rates for 2025?
The CRA sets reasonable per-kilometre allowance rates each year. For 2025, the rate is 72 cents per km for the first 5,000 kilometres and 66 cents per km for each additional kilometre. In the Northwest Territories, Yukon, and Nunavut, an extra 4 cents per km is added. These rates apply when an employer reimburses employees for business driving.
Can you claim mileage as a self-employed person?
Yes. If you are self-employed, you can deduct the business portion of your vehicle expenses. You have two options: use the CRA per-kilometre rates to estimate your costs, or track your actual expenses (fuel, insurance, maintenance, depreciation) and claim the business-use percentage. Actual expenses often result in a larger deduction if you drive a lot.
What counts as business driving?
Business driving includes trips to meet clients, travel between work sites, trips to the bank or post office for business, and travel to conferences or training. Your daily commute from home to your regular workplace does not count as business driving. If you work from home and drive to a client's office, that trip does count.
Do you need to keep a mileage logbook?
Yes. The CRA requires a detailed logbook to support your mileage claim. For each business trip, record the date, destination, purpose, and distance driven. Also record your odometer readings at the start and end of the year. Without a logbook, the CRA can deny your entire vehicle expense claim during an audit.
How do you calculate the business-use percentage?
Divide your total business kilometres by your total kilometres driven during the year. If you drove 20,000 km total and 12,000 km for business, your business-use percentage is 60%. You then apply this percentage to your total vehicle expenses. On $8,000 in total expenses, you could deduct $4,800.
What vehicle expenses can you deduct?
Deductible expenses include fuel, oil, insurance, licence and registration, maintenance and repairs, car washes, parking (for business), interest on a car loan (up to $300/month), and leasing costs (up to $1,050/month including tax). You can also claim Capital Cost Allowance (depreciation) on the vehicle, limited to a cost of $37,000 for passenger vehicles.
Is a vehicle allowance from your employer taxable?
It depends. If your employer pays a reasonable per-kilometre allowance that is based on the CRA rates and you are required to use your own vehicle for work, the allowance is tax-free and does not appear on your T4. If the allowance is a flat monthly amount not tied to kilometres driven, it is a taxable benefit and will be included in your employment income.
CRA-Aligned: Based on 2025 CRA rates and thresholds. For personal advice, speak to a qualified accountant or tax professional.
Disclaimer: This calculator provides estimates based on current CRA rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant before making financial decisions. Read our terms
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