CRA Mileage Rate 2025: Claiming Vehicle Expenses

Who Can Use the Per-Kilometre Rate?

Self-employed individuals reporting on T2125 can use the per-km rate to calculate their vehicle expense deduction without tracking actual vehicle costs. This is the simpler of two methods and is widely used by gig workers, freelancers, and contractors who don't want to track every fuel receipt.

Employees with a vehicle allowance from their employer use different rules (T2200 form). This guide focuses on self-employed use on T2125.

How to Calculate Your Mileage Deduction

Simply multiply your business kilometres by the applicable rate:

• First 5,000 km × $0.70 = deduction for first 5,000 km
• Remaining km × $0.64 = deduction for remaining km
• Add both together = total mileage deduction

Example: 18,000 business km in 2025:
5,000 × $0.70 = $3,500
13,000 × $0.64 = $8,320
Total deduction: $11,820

Mileage Rate vs. Actual Vehicle Costs: Which Is Better?

For high-mileage drivers (e.g., Uber drivers logging 40,000+ km/year) with a newer vehicle and high insurance costs, actual vehicle costs often produce a larger deduction than the per-km rate. Run both calculations to compare.

What Qualifies as a Business Kilometre?

• Driving to a client's location or job site
• Picking up a passenger (rideshare) or delivering an order (food delivery)
• Driving to purchase supplies for your business
• Driving to meet a client or attend a business meeting
• Travelling between work locations in the same day

What does NOT qualify:

• Commuting from home to a fixed place of business
• Personal errands while also running a business errand
• Travel for mixed personal/business purposes (only the business portion counts)

Mileage Log Requirements

The CRA requires a mileage log to support vehicle expense claims. A valid log includes for each business trip:

1. Date of trip
2. Destination
3. Business purpose
4. Starting odometer reading
5. Ending odometer reading
6. Kilometres driven

Also record your total annual odometer reading at the start and end of the year to calculate your total km and business-use percentage. Apps like MileIQ, TripLog, or Everlance automate this. A manual logbook also works — CRA accepts both.

Historical CRA Mileage Rates