Department of Finance Announces 2026 Automobile Deduction Limits

The Department of Finance Canada announced that effective January 1, 2026, the general prescribed rate used to determine the taxable benefit for employees relating to the personal portion of automobile expenses paid by their employers will remain at 34 cents per kilometre.

The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes in the provinces will increase by one cent to 73 cents per kilometre for the first 5,000 kilometres driven, and 67 cents for each additional kilometre.