This material is for informational purposes only and is not intended to provide tax or legal advice, nor should it be relied on to replace the advice of tax and legal professionals.
For any business that frequently reimburses employees for work-related travel, the CRA mileage rate is an essential tool. Simply reference and apply the correct rate(s) for your area to the number of business kilometres driven, and you have an efficient, standardized way to calculate reimbursements.
What Is the CRA Mileage Rate?
The CRA mileage reimbursement rate is the reasonable allowance set by tax authorities, in this case the CRA, to help companies calculate deductible, per-kilometre costs for business-related driving
If an allowance or reimbursement provided to an employee is based only on the number of kilometres driven for business in accordance with the current CRA allowance rates, it may not be taxable.
On the other hand, providing employees with mileage reimbursements at a rate higher or lower than the CRA’s prescribed kilometric rates could result in the agency determining the reimbursements were not reasonable and should therefore be taxed.
The Canada Revenue Agency provides detailed steps to help businesses determine whether an allowance or reimbursement should be treated as income for the employee and taxed accordingly.
How Is the CRA Mileage Rate Determined?
The standard, per-kilometre mileage allowance set by the CRA takes into account the costs of vehicle operation, including fixed costs like vehicle depreciation, insurance premiums and registration, as well as variable costs such as for fuel and maintenance. These rates are updated on an annual basis to reflect price fluctuations due to inflation or other factors.
Current CRA Mileage Rates: 2025
The CRA adjusts the Canada mileage allowance each year, detailing the prescribed per-kilometre rate considered “reasonable” for mileage reimbursements employers pay to employees using their personal vehicles for business reasons.
For 2025, these CAD rates are:
• 72 cents per kilometre for the first 5,000 km of business-related travel.
• 66 cents per kilometre for each additional kilometre driven for business after the first 5,000 km.
• 76 cents per kilometre for the first 5,000 km of business-related travel in the Northwest Territories, Yukon and Nunavut.
• 70 cents per kilometre for each additional kilometre driven for business in the Northwest Territories, Yukon and Nunavut after the first 5,000 km.
These rates give a standardized, easy-to-apply method to use when calculating costs tied to vehicle use, helping streamline travel expense management for employers, employees and others
Calculating Mileage Using Canada’s Mileage Rate
The CRA mileage reimbursement rate is often used by companies when determining how much to reimburse employees for business travel. First, determine which CRA mileage rate applies based on location and total kilometres driven for the year thus far, then use the basic calculation as follows:
Reimbursement amount = CRA standard kilometric rate x Business kilometres driven
If an employee’s annual mileage goes above 5,000 km during the course of a trip, simply separate the trip’s total distance into kilometres driven before and after reaching the limit. Then, using the appropriate rate for each distance, calculate both reimbursements and add them together to get the total allowance amount for the trip.
Total reimbursement amount = (CRA standard kilometric rate x Business kilometres driven up to 5,000 km) + (CRA kilometric rate for mileage over 5,000 km x Business kilometres driven above 5,000 km)
Using the CRA mileage rates to calculate reimbursements helps ensure employees are compensated — in an objective and consistent way — to help offset the costs of using their personal vehicles for work-related activities.
How to Keep Track of Employee Mileage Reimbursements for CRA Compliance
The revenue agency may request evidence of business use of a personal vehicle, so it is important to keep meticulous records to defend employee reimbursements as reasonable and tied to actual kilometres travelled.
To do so, the CRA advises that employees should provide their employers with detailed records of travel for the year. Alternatively, there are several third-party services that offer mileage tracking technology solutions that can be used in lieu of a manual log.
Though it depends on the situation, the CRA recommends employees provide receipts, a log of mileage driven for work for the year or a log of each business-related trip. A detailed log may include:
• Odometer reading at the start of the current year
• Dates of each business trip
• Starting locations
• Destinations
• Trip Purpose
• Total kilometres driven for each trip
• Odometer reading at the end of the current year
Does the CRA Mileage Rate Differ Between Vehicle Types?
As of 2025, the CRA mileage rate applies to automobiles, which the Canada Revenue Agency generally defines as a motor vehicle that is “designed or adapted to carry individuals on highways and streets” with a seating capacity of no more than 8 passengers, plus a driver. Emergency-response vehicles, taxis and hearses are a few of the exceptions to the “automobile” definition, as well as vans and pick-up trucks used primarily to generate income by transporting goods, equipment or passengers.
Are Businesses Required to Reimburse Employees for the Use of Personal Vehicles?
Employers are not required to reimburse their employees for business-related use of their personal vehicles, nor are they required to do so at the CRA mileage rates. However, if an allowance is paid to an employee that the CRA finds to be unreasonable because it is too high or low, it may be considered taxable.
How Enterprise and National Can Help
Managing employee travel expenses can be a challenge, especially if your business requires frequent trips. With the Business Rental Program offered through Enterprise Rent-A-Car and National Car Rental, you can avoid the hassle of mileage reimbursement (the detailed logs, the various rates, etc.), and offer your employees a clean, comfortable rental vehicle for business travel. Plus, there’s a cost benefit too. Based on an analysis conducted with current Enterprise clients, businesses often save money when choosing business rental over reimbursing mileage — particularly for trips over 100 miles.
“Our business rental customers pay 35¢ a kilometre for rentals compared to the CRA mileage rate of 72¢. That’s a savings of more than 50%,”1 said Dusty Federko, Assistant Vice President of SMB Development at Enterprise Mobility. “With competitive rates available at locations worldwide, our business rental programs help make travel expenses more affordable.”