For the 2025-26 income year, the current ATO cents per kilometre rate is 88 cents/km for eligible work-related car expense claims. The same 88 cent rate also applies for 2024-25, according to the ATO expenses for a car you own or lease guidance.
The rate is only one part of the claim. The method is capped at 5,000 work-related kilometres per car, per income year, and you still need records that show how you worked out the kilometres. If you are preparing a tax return, reimbursement report, or business car expense file, keep the income year, vehicle, work purpose, and payment type separate.
If you want the mileage tracking handled as trips happen, MyCarTracks automatic mileage tracking can capture trips, separate business and personal kilometres, and export reports for review.
This article is educational and is not tax, legal, payroll, employment, or financial advice. Australian car expense rules change by income year, vehicle, worker type, employer policy, award or agreement, and payment treatment. Check the official source and a qualified professional before relying on a calculation.
Quick answer
The current ATO cents per kilometre rate is 88 cents/km for the 2025-26 income year. You can use this method for up to 5,000 eligible work-related kilometres per car, per year. Multiply the eligible kilometres by 88 cents, keep records that show how you worked out the kilometres, and use the rate for the income year in which the driving happened.
Current ATO cents per kilometre rates
| Income year | ATO rate |
|---|---|
| 2025-26 | 88 cents/km |
| 2024-25 | 88 cents/km |
| 2023-24 | 85 cents/km |
| 2022-23 | 78 cents/km |
| 2020-21 and 2021-22 | 72 cents/km |
| 2018-19 and 2019-20 | 68 cents/km |
Use the rate for the income year when the work-related kilometres were driven. A July 2025 trip belongs to the 2025-26 income year; a June 2025 trip belongs to the 2024-25 income year.
If you are rebuilding older records, use the rate for that older income year rather than the current rate. The ATO rate table in the individual car-expense guidance is the best place to check recent income years before you calculate.
How to calculate a claim at 88 cents/km
The calculation is simple:
eligible work-related kilometres x ATO rate = deduction
Example: if you drove 3,000 eligible work-related kilometres during the 2025-26 income year, the calculation is:
3,000 km x $0.88 = $2,640
That result is the car expense amount produced by this method before any broader tax-return review. It does not mean every kilometre in your trip history is eligible, and it does not let you add fuel, registration, insurance, servicing, repairs, or depreciation again on top of the rate.
What the 88 cent rate covers
The 88 cent rate is designed to cover the running costs of using your car for eligible work-related travel. The ATO guidance lists costs such as decline in value, registration, insurance, maintenance, repairs, and fuel as included in the rate.
That bundled treatment is why receipts for those running costs are not needed under this method. The trade-off is the 5,000 kilometre cap and the need to show how you calculated the work-related kilometres.
Who can use the method
For employee work-related car expenses, the vehicle must be a car you own, lease, or hire under a hire-purchase agreement. You must have spent the money yourself, not been reimbursed for the expense, and the travel must be work-related.
For business motor vehicle expenses, the ATO cents per kilometre method is for sole traders and some partnerships where at least one partner is an individual, and only for cars. Companies and trusts use actual costs instead.
A car is generally a motor vehicle designed to carry less than one tonne and fewer than nine passengers, including the driver. Motorcycles, scooters, trucks, some utes, minibuses, and vehicles with one tonne or more carrying capacity or nine or more passengers do not use the normal car-expense methods. The ATO handles those as vehicle or travel expenses under different rules.
The 5,000 kilometre cap
The method lets you claim a maximum of 5,000 work-related kilometres per car, per income year. At the current 88 cent rate, the maximum claim for one car is:
5,000 km x $0.88 = $4,400
If you use more than one eligible car, keep records separately for each vehicle. If one car has 3,000 eligible kilometres and another has 2,500, the cap is applied per car, not as one combined fleet total.
If your work-related use is above 5,000 kilometres for a car, compare the logbook method instead of trying to push extra kilometres through the capped calculation.
Records to keep
You do not need receipts for every running cost when you use this method. You do need support for the kilometres and vehicle facts behind the claim.
Keep records that show:
- the date of each work-related trip
- the work purpose or destination
- the kilometres travelled
- which car was used
- whether the trip was work-related, business, or private
- how you calculated the total work-related kilometres
- evidence that you own, lease, or hire the car where that is relevant
The ATO gives diary records and app records as examples for showing how work-related kilometres were calculated. Business motor vehicle records generally need to be kept for five years, and the ATO records guidance also explains record formats and retention rules for tax claims.
Cents per kilometre or logbook method
The cents per kilometre method is usually simpler when eligible work-related kilometres are modest and you want one rate that includes running costs. It can also be useful when you do not have a full 12-week logbook and actual car expense records.
The logbook method is more demanding, but it may produce a better result when work-related use is high or actual car costs are significant. Under the ATO logbook method, you work out a business-use percentage from a representative logbook period, then apply that percentage to actual car expenses.
For many readers, the practical question is not which method is shorter. It is which method you can support with clean records for the income year.
Employee reimbursements and allowances
Do not treat an employer kilometre payment and a tax deduction as the same thing. Your employer may reimburse exact expenses, pay a kilometre-based car expense allowance, pay a flat car allowance, or provide a car under a wider arrangement.
The ATO allowances and reimbursements guidance separates allowances from reimbursements. A reimbursement pays back actual expenses already incurred; an allowance is a separately identified payment for expected or work-related costs. If a reimbursement is covered by FBT, it is not assessable income to the employee and the employee cannot claim a deduction for that expense.
The ATO withholding for allowances table has specific treatment for kilometre-based car expense payments within the approved rate and kilometre limit, and different treatment where the payment exceeds those settings. Check your payslip, income statement, employer policy, award, or agreement before deciding how a payment should be reported or whether a deduction remains available.
Common mistakes
- Using the current 88 cent rate for kilometres driven in an older income year.
- Claiming more than 5,000 kilometres per car under the method.
- Adding fuel, insurance, repairs, registration, or depreciation on top of the ATO rate.
- Claiming ordinary home-to-work travel without a supported exception.
- Using the car methods for a motorcycle, truck, minibus, or vehicle that is not a car.
- Treating an employer allowance, reimbursement, and deduction as interchangeable.
- Keeping only a yearly kilometre total with no diary, app, route, job, or calendar support.
How MyCarTracks helps with this method
This method is easier when your trip record is already organised by date, vehicle, distance, and purpose. MyCarTracks automatic mileage tracking can capture trips in the background, let drivers classify business and personal use, and export reports for tax or reimbursement review.
For teams, MyCarTracks fleet tracking can help managers review vehicle activity and driver reports before approving kilometre-based payments.
FAQ
What is the current ATO cents per kilometre rate?
The current ATO cents per kilometre rate is 88 cents/km for the 2025-26 income year. The same rate applies for 2024-25.
How many kilometres can I claim without receipts?
You can claim up to 5,000 eligible work-related kilometres per car, per income year without receipts for car running costs. You still need records showing how you worked out the kilometres.
Can I claim 5,000 kilometres for more than one car?
The cap applies per car, per income year. Keep each car’s work-related kilometres and records separate so the calculation is clear.
Can I use the 88 cent rate for reimbursement?
An employer may use the ATO car rate in a reimbursement or allowance policy, but the tax and payroll treatment depends on the payment type, approved rate, kilometre limit, and any workplace entitlement. Do not assume a payment is tax-free or deductible without checking the ATO treatment and your employment arrangement.
Do I need a logbook for this method?
You do not need the full logbook required for the logbook method. You do need a reliable record, such as a diary, calendar, app report, or trip record, that shows how you calculated your work-related kilometres.
When should I use the logbook method instead?
Consider the logbook method when a car has more than 5,000 work-related kilometres, when actual car costs are high, or when a business-use percentage of actual expenses would be more accurate. The logbook method needs stronger records, including a representative logbook period and expense evidence.
Where to go next
- ATO Mileage Guide for Australia for the broader car expense, reimbursement, logbook, and FBT overview
- Historical ATO Cents Per Kilometre Rates (Australia) for older income-year rates
- Car Expense Tax Deductions (Australia) for method selection and deduction rules
- Logbook Method (Australia) for business-use percentage and actual car expense records
- Mileage Reimbursement for Employees (Australia) for allowances, reimbursements, and employer-paid kilometres