CRA Motor Vehicle Expenses for the Self-Employed in Canada (2026)

Short answer: The Canada Revenue Agency (CRA) lets self-employed people deduct motor vehicle expenses as a share of their actual costs, not at a per-kilometre rate. Add up the year’s fuel, insurance, licence and registration, maintenance and repairs, loan interest and leasing costs, multiply by business kilometres ÷ total kilometres, and claim the result on line 9281 of Form T2125. A logbook supports that percentage; after one full base year, a three-month simplified logbook can support later years if business use stays within 10%. The 73¢ per km rate for 2026 is what employers can pay employees tax-free, not a sole proprietor’s deduction.

This is how self-employed vehicle expenses in Canada work for sole proprietors, freelancers and contractors in the 2026 tax year, using the CRA’s own term, “motor vehicle expenses”. The vehicle line is one of many on the business form; Form T2125 explained covers the rest, and small business tax deductions in Canada lists everything else you can claim.

How do CRA motor vehicle expenses work for the self-employed?

You deduct the business-use share of what the vehicle actually cost you to run during the year.

Deductible motor vehicle expenses = total eligible running costs × (business kilometres ÷ total kilometres driven in the fiscal period)

Everything hinges on two numbers from your logbook, business kilometres and total kilometres, and on the receipts behind the costs. The CRA sets out the method on its motor vehicle expenses page. The cost of buying the vehicle is not a running cost: you claim it over several years through capital cost allowance (CCA), using the same business-use percentage.

Can you claim CRA vehicle expenses per km?

No. A sole proprietor cannot claim a flat rate per kilometre for business driving; the per-km figures you see are for something else.

The CRA’s reasonable per-kilometre allowance rates are what an employer can pay an employee who drives their own car for work without the payment being taxable:

2026 allowance rate	First 5,000 km	Each additional km
Provinces	73¢	67¢
Yukon, Northwest Territories, Nunavut	77¢	71¢

They matter to you only if you pay an employee a vehicle allowance, or receive one from an employer.

The CRA’s simplified method is also a per-km rate, but it is for personal deductions: moving expenses, medical travel and the northern residents deduction. Its rates for the 2025 tax year ran from 55.5¢ per km in Saskatchewan to 70.5¢ in Nunavut and Yukon, by the province where the trip began. It cannot be used for business driving on a T2125.

Which motor vehicle expenses can you deduct?

The running costs below, reduced to your business-use percentage, plus a few business-only costs you claim in full.

Cost	How you claim it	Notes
Fuel and oil	Business share	Keep the receipts
Insurance	Business share	Supplementary business insurance is claimed in full
Licence and registration	Business share
Maintenance and repairs	Business share
Interest on a vehicle loan	Business share, capped	$350 a month for passenger-vehicle loans taken out in 2026
Leasing costs	Business share, capped	A monthly ceiling applies to passenger vehicles
Capital cost allowance	Business share, separately on line 9936	Class 10.1 ceiling of $39,000 before tax for passenger vehicles bought in 2026
Parking for business trips	In full	Not reduced by the ratio
Parking and traffic tickets	Not deductible	Fines are never a business expense

The interest cap and the Class 10.1 ceiling, up from $38,000 for vehicles acquired in 2025, come from the Department of Finance’s 2026 automobile deduction limits. Check the leasing ceiling for your lease’s start year on the same page. These limits apply to passenger vehicles; the CRA’s definitions decide whether a van or pickup counts as one.

Worked example: how much can you claim?

A freelance photographer drove 20,000 km in the year, 12,000 of them to earn business income: a 60% business-use ratio.

Expense	Amount paid in the year
Fuel	$3,200
Insurance	$1,800
Repairs and maintenance	$1,100
Licence and registration	$120
Loan interest (under the cap)	$900
Total eligible costs	$7,120

Deduction: $7,120 × 60% = $4,272 on line 9281. CCA on the car itself is worked out separately at the same 60%, and parking receipts from client shoots are added in full.

What logbook does the CRA require?

A record of every business trip, with the date, destination, purpose and kilometres, plus the odometer reading at the start and end of the fiscal period.

That is the standard on the CRA’s motor vehicle records page. The logbook proves the percentage; the receipts prove the costs. You need both.

• Odometer reading on the first and last day of the fiscal period
• Date, destination and business purpose of each trip
• Kilometres for each business trip
• Running totals of business and total kilometres
• Receipts for fuel, insurance, repairs, licence, interest and leasing
• Odometer reading and date whenever you buy, sell or trade a vehicle
• Everything kept for six years from the end of the tax year it relates to

How does the CRA simplified logbook work?

Keep a full logbook for one complete year (the base year); after that, a logbook for a three-month sample period each year can stand in for the full year, as long as the result stays within 10% of the base year.

The CRA’s formula on the motor vehicle records page is:

(sample-period business use in the current year ÷ the same period’s business use in the base year) × base-year annual business use = calculated annual business use

Example. Your 2025 full logbook shows 60% business use for the year and 55% for January to March. In 2026 you log January to March only and get 58%. The calculation is (58% ÷ 55%) × 60% = 63.3%, close to the base year, so you claim 63.3% of your 2026 costs: $7,000 × 63.3% = $4,431.

If the calculated figure moves more than 10% from the base year, the base year no longer represents your driving. The sample then supports only its own three months, and you need actual trip records for the rest of the year. Keep the base-year logbook for as long as you rely on it.

Is driving from home a business kilometre?

Usually not: driving between home and your regular place of business is commuting, which is personal.

Trips to see clients, pick up supplies or travel between work sites usually count as business kilometres. If you run the business from a home office, that can change which trips count, so check your case with the CRA or an accountant; whether your workspace qualifies as a home office is covered in business-use-of-home expenses.

What if you change vehicles or start using one for business mid-year?

The ratio works the same way, but per vehicle, and the odometer readings at each change are what keep it provable.

• One record per vehicle. Two cars used for business means two logbooks, two sets of costs and two percentages, never an average.
• Record the change. When you buy, sell or trade, note the date and the odometer reading, so each vehicle’s total kilometres add up.
• Costs follow ownership. Only what you paid while you owned and used that vehicle for business belongs in its total.
• A personal car turned business car generally enters your CCA calculation at its fair market value when the use changes, not at what you paid years ago. Confirm the treatment with the CRA or an accountant before claiming.

…and where does Keel fit?

Keel: Invoice Maker & Receipts, an iPhone app by Ilura Technology OÜ, keeps business mileage records alongside your receipts and expenses, invoices and estimates, each kept under its job, so the trips and the fuel and repair receipts for the year are in one place. Records stay on the iPhone, with no account, no bank connection and no cloud sync; the App Store privacy label reads “Data Not Collected”. Fuel and repair receipts are read on the device with Apple Intelligence, trips and costs go into an append-only, hash-chained ledger, and the Accountant Pack exports the year as a CSV plus a one-page summary PDF.

Keel does not apply the business-use ratio for you, fill in Chart A of the T2125, file returns, connect to the CRA or calculate tax owed. It is free with no invoice limit (free invoices carry a small “Made with Keel” footer), and Keel Lifetime, a one-time purchase ($249.99 USD; local price on the App Store), adds accountant-ready exports and advanced reports, plus custom branding, a signature and premium templates. Keel on the App Store.

Frequently asked questions

Can I claim mileage instead of actual expenses if I am self-employed in Canada? No. Canada does not give sole proprietors a flat-rate-per-kilometre deduction for business driving. You claim your actual costs multiplied by your business-use percentage, supported by a logbook and receipts. The per-km figures you may have seen are employee allowance rates or the simplified method for personal deductions.

What is the CRA per-km rate for 2026? For 2026, the reasonable allowance rate is 73¢ per km for the first 5,000 km and 67¢ after that, or 77¢ and 71¢ in the territories. It is the most an employer can generally pay an employee per km without the allowance being taxable. It does not set a self-employed person’s deduction.

What is the CRA simplified method for vehicle expenses? It is a flat per-km rate, set by province or territory, that you can use instead of receipts for vehicle costs on moving expenses, medical travel and the northern residents deduction. It is not available for business driving. Don’t confuse it with the simplified logbook, which is the three-month sample method for proving business use.

Do I need receipts, or is the logbook enough? You need both. The logbook proves the business-use percentage; the receipts prove what the costs were. A tidy logbook with no fuel or repair receipts behind it shrinks the claim to what you can document, and a card statement shows an amount but not what was bought.

Where do motor vehicle expenses go on my tax return? On line 9281 of Form T2125, after you work them out in Chart A, Motor vehicle expenses, which asks for business and total kilometres and each cost. CCA on the vehicle goes through the CCA section and line 9936, and business parking is claimed in full. The CRA explains the chart on its motor vehicle expenses (not including CCA) page.

How long do I keep vehicle records? Six years from the end of the last tax year they relate to, or from the date you filed if you filed late. That covers the logbook, odometer readings, fuel and repair receipts, insurance and licence documents, and loan or lease papers. Keep your base-year logbook as long as a later sample year depends on it.

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This article is general information, not tax advice. Consult a qualified accountant or tax professional.