Enter the business kilometres driven in 2025 to see the tax-free allowance at the CRA reasonable per-kilometre rates: a higher rate on the first 5,000 km, a lower one on every kilometre after, and 4¢ more per kilometre in Yukon, the Northwest Territories and Nunavut. Rates are current for the 2025 tax year.
Your kilometres
How it works. CRA publishes two per-kilometre rates each year: one for the first 5,000 business kilometres and a lower one for every kilometre after that. Driving in the three territories earns an extra 4¢ on both bands. The calculator multiplies your kilometres through the two tiers and adds the bands together — that total is the most an employer can pay per kilometre without the allowance becoming taxable income.
Tax-free allowance
$0
0 business km at the 2025 tax year CRA reasonable rates
These are the 2025 tax year CRA reasonable automobile allowance limits. A kilometre log — date, destination, purpose and distance for each trip — is what defends the claim if CRA ever asks; without one, even a correctly-rated allowance is hard to support.
An estimate is a starting point. Get your real number.
This calculator uses published rates. Your actual position depends on the credits, deductions and structure behind your numbers.
- A professional tax accountant reviews your figures, not a formula
- Fixed quote before any work starts
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When the per-kilometre allowance applies
The per-kilometre rates are CRA’s definition of a reasonable automobile allowance. An employer who reimburses an employee for business driving at or below these rates, based solely on actual business kilometres, pays a tax-free allowance — nothing lands on the T4. Pay a flat monthly car allowance instead, or a per-kilometre rate above the limits, and the whole amount becomes taxable employment income. The two-tier structure rewards the first 5,000 kilometres at 72¢ and everything after at 66¢, and driving in Yukon, the Northwest Territories or Nunavut adds 4¢ to both bands.
If you are self-employed, this rate is not your deduction. You claim the actual costs of running the vehicle — fuel, insurance, maintenance, licence, capital cost allowance — prorated by the business share of total kilometres driven. Either way, the kilometre log is the foundation: good bookkeeping keeps it alongside the receipts so the claim survives review.
What this calculator does not cover
It does not compare the allowance to the actual-expense method, which can produce a larger claim for expensive-to-run vehicles — that comparison needs your real operating costs. Parking fees and toll charges incurred on business trips are also outside the per-kilometre rate and are claimable separately with receipts. For how vehicle costs fit into a self-employed return overall, try the self-employed tax calculator.
| Band | Provinces | Territories |
|---|---|---|
| First 5,000 km | $0.72 | $0.76 |
| Over 5,000 km | $0.66 | $0.70 |
Rates reviewed for the 2025 tax year by Udit Gupta, Founder and Tax Accountant. Federal and provincial rates change annually, and this tool is an estimate for planning rather than tax advice. Confirm current figures before relying on them for a filing.
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Rates and method reviewed by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. He is Big 4 trained, at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia. In 2014 he founded his accounting practice to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
Sources. CRA — Businesses · Income Tax Act (Justice Laws Website)