Updated for the 2026–27 income year: the cents per kilometre rate is 91 cents per kilometre from 1 July 2026. The rate was 88 cents per kilometre for 2025–26.
The cents per kilometre method is a straightforward way for eligible Australian taxpayers to calculate a deduction for work-related or income-producing use of a car. You multiply your eligible kilometres by the ATO rate for that income year, subject to a maximum of 5,000 kilometres per car.
Current ATO cents per kilometre rates
2026–27 income year
Rate: 91 cents per kilometre
Maximum claim: 5,000 kilometres per car
Maximum calculation: $4,550 per car
2025–26 income year
Rate: 88 cents per kilometre
Maximum claim: 5,000 kilometres per car
Maximum calculation: $4,400 per car
The 2026 determination sets the 91-cent rate for the income year beginning 1 July 2026. The ATO describes this as an 89-cent base rate with a temporary one-off two-cent uplift for 2026–27. The earlier 88-cent determination applied through 30 June 2026.
How the calculation works
The formula is:
Eligible business kilometres × the rate for the income year
For example, if you travel 3,250 eligible kilometres during 2026–27:
3,250 km × $0.91 = $2,957.50
If you travel 6,200 eligible kilometres, the cents per kilometre calculation is still capped at 5,000 kilometres:
5,000 km × $0.91 = $4,550
The cap applies separately to each car. Travelling more than 5,000 eligible kilometres does not prevent you from using the method, but kilometres above the cap do not increase the deduction. If your eligible use is substantial, compare the result with the logbook method before deciding which method best reflects your circumstances.
What the rate covers
The rate is intended to account for the running costs of the car, including fuel, registration, insurance, servicing, repairs and decline in value. You cannot claim those same car running costs again as separate deductions when using the cents per kilometre method.
Parking fees, road tolls and some other travel expenses are not part of the cents per kilometre rate and may be treated separately when they are otherwise deductible. Always check the current ATO guidance for your circumstances.
Which trips may count?
Only kilometres with a sufficient connection to earning assessable income should be included. Depending on your work and circumstances, this may include travel:
- directly between separate workplaces
- from your usual workplace to a client, customer, meeting or alternate work location
- between job sites while carrying out your duties
- to make work-related deliveries, collections or site visits.
Normal travel between home and a regular workplace is generally private, even when you live a long distance away or work outside normal hours. Limited exceptions can apply, including some travel involving essential bulky equipment or genuinely itinerant work. Do not classify a journey solely because it was made during a workday.
Records you should keep
You do not need receipts for every car running cost when you use this method, but the ATO may ask how you worked out the number of eligible kilometres. Keep a reliable calculation supported by records such as:
- the date and purpose of each journey
- start and end locations
- the distance travelled
- odometer readings where available
- diary, calendar, job or customer records that support the trip
- details of reimbursements or allowances from an employer or client.
Electronic records are acceptable. In most cases, supporting tax records should be retained for five years from the date you lodge the relevant return.
Cents per kilometre or logbook method?
The cents per kilometre method is often useful when eligible travel is modest and you want a simpler calculation. The logbook method may be worth comparing when:
- you travel more than 5,000 eligible kilometres per car
- business use represents a significant share of the car’s total use
- actual running costs are relatively high
- you already maintain a representative logbook and expense records.
The best result depends on the vehicle, actual costs and travel pattern. A higher calculation does not automatically mean a claim is allowable; the underlying travel must still be eligible and properly supported.
How Travel Logs can help
Travel Logs can automatically record journeys, retain route and distance details, separate business and personal trips, and export reports for review. It gives you a consistent trip history from which to prepare your calculation, but you remain responsible for classifying travel correctly and confirming that a deduction is available.
For the latest rate and rules, refer to the ATO cents per kilometre determination and the Federal Register of Legislation.
This article provides general information only and is not tax advice. Tax outcomes depend on individual circumstances. Check current ATO guidance or speak with a registered tax agent before lodging a claim.