Most Aussies miss out on $2,000+ in car tax deductions every year—simply by forgetting to track their work trips.
ATO Mileage Rates 2026: 88¢/km + Free Deduction Calculator
The ATO's 88 cents per kilometre rate is your ticket to claiming thousands in car deductions. Use our free calculator to maximize your claim, compare methods, and never miss a deductible kilometre again.
Meet Tom, a sales rep from Sydney. He drove 3,500 km for work this year—visiting clients, picking up supplies, attending conferences. But because he didn’t track his trips, Tom is about to miss out on a $3,080 tax deduction. That’s roughly $1,200+ back in his pocket at tax time (depending on his tax rate). Don’t be like Tom—read on to make sure you claim what you deserve.
🧮 How Much Could You Claim?
Most people forget to log their trips and lose out. Use our free calculator to estimate your potential deduction in 30 seconds. No signup, no BS.
Here’s what you’ll find in this guide:
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Let’s break down the rules, the traps, and the best ways to maximise your ATO car deduction for 2026.
What's the ATO Mileage Rate for 2026?
88 cents per kilometre
(Up from 85¢ in 2023-24 and 78¢ in 2022-23)
This rate covers everything: fuel, servicing, insurance, registration, and depreciation. You don't need to keep receipts for any of these costs—the 88 cents per km is an all-inclusive rate.
The ATO updates this rate annually based on average running costs across all vehicle types (petrol, diesel, hybrid, EV). It's designed to keep up with inflation and rising car expenses.
Let's say you drive 3,000 km for work this year:
3,000 km × $0.88 = $2,640 deduction
At a 32.5% tax rate, that's $858 back in your pocket at tax time. Not bad for tracking your trips!
📊 ATO Rate History: 2020-2026
The cents per kilometre rate has increased steadily to keep pace with vehicle running costs:
| Financial Year | Rate per km | Annual Increase | Max Deduction (5,000km) |
|---|---|---|---|
| 2020-21 | 72¢ | — | $3,600 |
| 2021-22 | 72¢ | — | $3,600 |
| 2022-23 | 78¢ | +6¢ (8.3%) | $3,900 |
| 2023-24 | 85¢ | +7¢ (9.0%) | $4,250 |
| 2025-26 (Current) | 88¢ | +3¢ (3.5%) | $4,400 |
Key insight: The rate has increased 22% since 2020-21, adding $800 to your maximum annual claim.
🤔 Cents per km vs Logbook Method
Choosing the right method can save you thousands. Here's how they compare:
| Feature | Cents per km (88¢) | Logbook Method |
|---|---|---|
| Maximum km claim | 5,000 km/year | Unlimited |
| Max annual deduction | $4,400 | $10,000+ (depends on actual costs) |
| Record keeping | Simple diary (dates, destinations) No receipts needed | 12-week logbook + all receipts Fuel, servicing, insurance, rego |
| Calculation method | Simple: km × 88¢ | Complex: (Total costs × business %) Based on logbook business use % |
| Best for | Low business km (<5,000/year) Occasional work trips | High business km (>5,000/year) Full-time tradies, sales reps, delivery drivers |
| Evidence required | Low — diary/app records sufficient | High — logbook + receipts mandatory |
| Time investment | 5 minutes/week | 30+ minutes/week |
💡 Pro Tip: If you drive 15,000 km for work at 88¢ = $13,200 value, but cents/km caps at $4,400. Switch to logbook method to claim the full amount (if your actual costs support it).
🧮 Calculate Your Mileage Deduction in 30 Seconds
See exactly how much you can claim with the 88¢/km rate or logbook method.
✓ Instant ATO-compliant calculations • ✓ Compare both methods • ✓ Track monthly trips
Quick Estimates
Enter your annual km and see your deduction instantly
Method Comparison
See which method (cents/km vs logbook) saves you more
Monthly Breakdown
Track trips by month and export CSV for tax time
No signup required • 100% ATO-compliant • Used by 10,000+ Aussies
Can I Claim This?
Not everyone can claim mileage. Here's the quick test:
✅ You CAN Claim If You:
- →Drive between work sites (nurse visiting patients, tradie going to jobs, sales rep meeting clients)
- →Run your own business and use your car for business purposes
- →Own rental properties and drive to inspect them or meet tenants
- →Drive to temporary work locations (not your regular office)
- →Transport bulky tools/equipment that can't stay at work
❌ You CANNOT Claim:
- ✗Home to regular workplace — this is private travel, even if it's a long commute or you start early
- ✗Lunch breaks — personal errands during work hours
- ✗Work-provided cars — if your employer pays for fuel and costs
- ✗Reimbursed travel — can't double-claim if your employer already paid you back
You can only claim up to 5,000 kilometres per year using this simple method (that's a maximum $4,400 deduction). If you drive more than 5,000 km for work, you'll need to use the logbook method instead.
How Does the Cents Per Kilometre Method Work?
It's ridiculously simple. Follow these four steps:
Track Your Trips
Every time you drive for work, note down: date, where you went, why, and how many kilometres. You can use a notebook, spreadsheet, or app. Just keep it simple and consistent.
Add Them Up
At the end of the financial year (or when doing your tax return), total all your work kilometres. Maximum 5,000 km.
Multiply by 88 Cents
Total kilometres × $0.88 = Your deduction. That's it. No receipts, no tracking actual costs, done.
Claim on Your Tax Return
Enter it at Item D1 (car expenses). If the ATO asks, you'll need your trip records to prove it.
Example: Mobile Pet Groomer
Meet Emma: She runs a mobile pet grooming business from her van. She visits 4-5 clients per day, averaging 35 km per day.
Annual work travel: 35 km/day × 4 days/week × 48 weeks = 6,720 km
Problem: Emma exceeds the 5,000 km limit!
Solution: She needs to use the logbook method instead (keeps a 12-week logbook + all receipts). This lets her claim based on actual costs, which could be more than $4,400.
Stop Losing Money on Forgotten Trips
Automatic GPS tracking + ATO-compliant reports. Free for 10 trips/month, $19/month for unlimited.
Business Travel vs Work Travel: What's the Difference?
This trips people up all the time. Here's the distinction:
🚗 Work Travel (Employees)
You're an employee driving as part of your job duties—but not your regular commute.
Examples:
- Between multiple work sites
- Visiting clients
- Picking up supplies for work
- Conferences or training
- Temporary work locations
💼 Business Travel (Self-Employed)
You run your own business and drive to earn business income.
Examples:
- Delivering products to customers
- Meeting suppliers
- Inspecting rental properties
- Business networking events
- Bank runs for business deposits
❌ The #1 Audit Trigger: Home to Work
This is the most common mistake. Your drive from home to your regular workplace is private travel, even if:
- You work 12-hour days
- You start at 5am
- You live 80 km from work
- There's no public transport
- You occasionally work from home
Exception: You CAN claim home to work if you're hauling bulky tools/equipment that can't be stored at work (e.g., tradie with $20K worth of tools in the ute).
What Records Do I Actually Need?
Good news: the cents per km method doesn't require receipts. But you do need to prove your trips actually happened. Here's what the ATO wants to see:
Must-Have Records
Date of trip
When did you drive? (e.g., "March 15, 2026")
Kilometres travelled
How far? Use odometer readings or GPS distance
Purpose of trip
Why was it work-related? Be specific: "Client meeting with ABC Corp"
Start and end locations
Where did you go? (e.g., "Office → Client site → Office")
⏰ Keep Records for 5 Years
The ATO can audit you up to 5 years after you lodge. If you claim $3,080 on your 2025-26 return (lodged in October 2026), keep records until at least October 2031.
📱 Track Digitally (ATO-Approved)
Forget paper logbooks. Apps like ReceiptClaimer automatically capture:
- →GPS distance for each trip (can't be faked)
- →Date/time stamps (automatically logged)
- →Trip purpose (you enter once, reuse for common routes)
- →ATO-compliant PDF reports for your accountant
Bonus: No more "Did I drive to that client meeting in March?" guesswork at tax time.
When Should I Use the Logbook Method?
If you drive more than 5,000 km for work, or want to claim more than $4,400, you need the logbook method. Here's how it compares:
Cents Per Kilometre Method
Logbook Method
💡 Which One Should You Choose?
Stick with cents per km if: You drive less than 5,000 km for work, want simple paperwork, and don't care about maximizing your claim.
Switch to logbook if: You drive more than 5,000 km, have an expensive car (higher depreciation), or your actual costs exceed 88¢/km.
Example: You drive a $70,000 SUV 12,000 km annually (65% for work). Logbook method could claim $10,000+ vs the $4,400 cents per km cap.
Don't Make These Mistakes
These are the audit red flags that get people caught:
❌ Claiming your daily commute
Home to regular workplace = private travel. The ATO knows, and they check.
❌ Going over 5,000 km without a logbook
You'll get caught in an audit. The ATO cross-references your claim with odometer readings.
❌ No records: "It's only 4,000 km, they won't check"
They do check. You still need trip records—just not receipts.
❌ Guessing at tax time
"I think I drove about 3,500 km" won't hold up. Keep contemporaneous records.
❌ Mixing methods
Pick one method per car per year. Can't use cents per km for some trips and logbook for others.
Real People, Real Numbers
🏠 Sarah: Landlord with 4 Rental Properties
Her situation: Monthly inspections, tenant meetings, organizing tradespeople
Annual distance: 2,200 km (average 45 km per visit × 48 visits)
Her deduction:
2,200 km × $0.88 = $1,936
Sarah uses ReceiptClaimer to log each property visit. At tax time, she exports a PDF showing all trips. Her accountant loves it—takes 30 seconds to verify.
⚡ James: Mobile Electrician
His situation: 4-6 job sites per day, supplies pickup, quote visits
Annual distance: 16,500 km (75% business use)
His decision: Switched to logbook method (over 5,000 km)
• Total car costs: $13,500/year
• Business use: 75% (proven by 12-week logbook)
• His deduction: $10,125
If James used cents per km, he'd only claim $4,400 (5,000 km max). Logbook method nets him an extra $5,725!
💼 Priya: Marketing Consultant
Her situation: 2-3 client meetings per week, occasional conferences
Annual distance: 3,800 km
Her deduction:
3,800 km × $0.88 = $3,344
Priya keeps it simple: uses her phone's GPS tracker to auto-log trips. No manual entry, no forgetting to record. Her tax agent gets a clean CSV export every year.
🔨 Mike: Plumber (Sole Trader)
His situation: 3-4 jobs daily, emergency callouts, Bunnings runs
Annual distance: 18,000 km total (12,000 km business use = 67%)
His strategy: Logbook method (well over 5,000 km cap)
• Total car costs: $16,800/year (ute + tools)
• Business %: 67% (12-week logbook kept religiously)
• His deduction: $11,256
Comparison: Cents/km would give Mike only $4,400. Logbook method saves him an extra $6,856!
🚗 Emma: Sales Representative
Her situation: Territory covers 3 states, visiting retail stores weekly
Annual distance: 22,000 km (80% business travel)
Her approach: Logbook method + company car allowance
• Total car costs: $14,200/year
• Business use: 80% (verified with GPS tracking app)
• Company allowance received: $5,000/year (taxable income)
• Net deduction: $11,360 - $5,000 = $6,360
Emma offsets her allowance with actual expenses. The logbook proves her 80% business use, giving her a bigger net deduction than the 5,000 km cap would allow.
📦 David: DoorDash/Uber Eats Driver
His situation: Part-time gig economy driver, 15-20 hours/week
Annual distance: 8,500 km (100% business - dedicated delivery vehicle)
His method: Logbook (exceeded 5,000 km cap)
• Total car costs: $8,900/year (older Camry, low maintenance)
• Business use: 100% (kept separate personal car)
• His deduction: $8,900
⚠️ Gig Economy Trap: Many delivery drivers use cents/km (capped at $4,400) when they could claim $8,900+ with a proper logbook. David's accountant set up automatic trip tracking through his phone - takes zero effort, saves $4,500/year.
📊 The Method Comparison Summary
| Person | Annual km | Method Used | Deduction | If cents/km | Extra Saved |
|---|---|---|---|---|---|
| Sarah (Landlord) | 2,200 | Cents/km | $1,936 | $1,936 | $0 |
| Priya (Consultant) | 3,800 | Cents/km | $3,344 | $3,344 | $0 |
| Mike (Plumber) | 12,000 | Logbook | $11,256 | $4,400 | +$6,856 |
| James (Electrician) | 16,500 | Logbook | $10,125 | $4,400 | +$5,725 |
| Emma (Sales Rep) | 22,000 | Logbook | $11,360 | $4,400 | +$6,960 |
| David (Delivery) | 8,500 | Logbook | $8,900 | $4,400 | +$4,500 |
Key Takeaway: If you drive >5,000 km for work, the logbook method typically saves $4,000-$7,000 extra per year. Worth 30 minutes of setup? Absolutely.
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What to Do This Week
Don't let another year go by leaving money on the table. Here's your action plan:
Start Tracking Today
Don't wait until tax time. Set up a system now—app, spreadsheet, or notebook. Make it a habit.
Recommended: Use a GPS tracker app that runs in the background. No manual entry needed.
Estimate Your Potential Deduction
Use our free mileage calculator to see how much you could claim. Takes 30 seconds.
If you're over 5,000 km, start researching the logbook method now.
Check Last Year's Return
Did you claim car expenses last year? If not, and you drove for work, you can amend your return (up to 2 years back).
Note: You'll need records to support the claim. Can't backdate without proof.
Talk to Your Accountant
Ask them: "Should I be tracking mileage?" They'll tell you if you qualify and which method to use.
Most accountants underestimate how much their clients drive for work. Bring it up!
Quick FAQs
Q: Can I claim both cents per km and actual expenses?
Nope. Pick one method per car per year. Can't mix and match.
Q: What if I drive for Uber AND work?
Track them separately. Uber is business income (different tax rules). Work travel uses cents per km or logbook.
Q: My employer reimburses 50¢/km. Can I claim the 38¢ difference?
No. ATO rules say you can only claim trips that aren't reimbursed at all. If your employer pays for it, you can't claim it—even if they pay less than 88¢.
Q: Do electric cars get a different rate?
Nope. 88 cents per km covers all cars (petrol, diesel, hybrid, EV). The rate is an average across all vehicle types.
Q: Can I backdate claims if I forgot to track?
Technically yes (within 2 years), but you need proof. "I reckon I drove about 3,000 km" won't fly. You need actual records. Start tracking now for next year.
Q: Can I claim mileage if I use a company car?
No. If your employer owns the car and pays all running costs, you can't claim mileage deductions. However, if you pay for some costs (like fuel) out of pocket without reimbursement, you can claim those specific expenses—but not using cents per km method.
Q: What's the minimum distance I need to track?
There's no minimum! Even if you only drive 200 km for work all year (= $176 deduction), you can claim it. However, the administrative hassle means it's barely worth it for very low amounts. Most accountants suggest claiming if you exceed 500 km/year ($440+).
Q: Do I need GPS tracking or can I estimate?
For cents per km method (under 5,000 km), you can use reasonable estimates if you have supporting evidence (diary entries, calendar appointments, Google Maps routes). GPS tracking isn't mandatory but makes audits much easier. For logbook method (>5,000 km), you MUST track actual distances precisely—estimates won't cut it.
TL;DR: The Essentials
- →2025-26 rate: 88 cents per kilometre (up from 85¢)
- →Maximum: 5,000 km ($4,400) using simple method
- →No receipts: 88¢ covers everything (fuel, maintenance, insurance, rego, depreciation)
- →Must track: Date, km, purpose, locations (keep for 5 years)
- →Can't claim: Home to regular workplace (that's private travel)
- →Over 5,000 km? Use logbook method for bigger claims