ATO Mileage Rates 2026: Complete Calculator & Guide
Everything Australian taxpayers need to know about claiming car expenses using the ATO's 88 cents per kilometre rate for the 2025-26 financial year. Includes free calculator and record-keeping requirements.
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Table of Contents
What is the ATO Mileage Rate for 2026?
For the 2025-26 financial year (1 July 2025 - 30 June 2026), the ATO mileage rate is:
88 cents per kilometre
This rate applies to all work-related car travel and business travel by sole traders, partnerships, and companies. The rate increased from 85 cents (2023-24) and 78 cents (2022-23) to account for rising fuel, servicing, and insurance costs.
The cents per kilometre method is the simplest way to claim car expenses on your tax return. You don't need to track actual costs like fuel, maintenance, or insurance - the 88 cents per km covers everything.
Quick Example
If you drive 3,000 km for work-related purposes during the year:
3,000 km × $0.88 = $2,640 tax deduction
Who Can Claim Mileage?
Not everyone can claim car expenses. Here's who qualifies:
✅ You CAN Claim If:
- You're an employee driving between work sites (e.g., nurse visiting patients, tradie going to job sites)
- You're a sole trader or business owner using your car for business purposes
- You're a landlord driving to inspect rental properties or meet tenants
- You drive to temporary work locations (but not your regular workplace)
- You transport bulky tools or equipment for work (even to your regular workplace)
❌ You CANNOT Claim:
- Home to regular workplace - this is private travel, not deductible
- Lunch breaks - personal errands during work hours
- Work-provided cars - if your employer pays for fuel and costs
- Travel reimbursed by employer - can't claim twice
⚠️ Important Rule Change
Since 1 July 2015, you can only claim up to 5,000 kilometres per year using the cents per kilometre method. If you drive more than 5,000 km for work, you must use the logbook method instead.
How the Cents Per Kilometre Method Works
The cents per kilometre method is designed for simplicity. Here's the step-by-step process:
Track Your Work Kilometres
Keep a record of each work-related trip: date, destination, purpose, and kilometres. You can use a logbook, spreadsheet, or mileage tracking app like ReceiptClaimer.
Calculate Total Kilometres
Add up all your work-related kilometres for the financial year. Remember the 5,000 km maximum limit.
Multiply by 88 Cents
Total kilometres × $0.88 = Your tax deduction. That's it! No need to keep fuel receipts or track maintenance costs.
Claim on Your Tax Return
Enter the deduction at Item D1 (car expenses) on your tax return. Make sure you have records to prove the kilometres if the ATO audits you.
Real Example: Mobile Hairdresser
Scenario: Sarah runs a mobile hairdressing business and visits clients at home.
Annual work travel: 4,200 km (average 12-15 km per client, 3-4 clients per day)
Calculation:
4,200 km × $0.88 = $3,696
This covers all car costs: fuel, servicing, insurance, registration, and depreciation. Sarah doesn't need to keep any receipts for these expenses.
Business Travel vs Work-Related Travel: What's the Difference?
Understanding this distinction is crucial for claiming correctly:
🚗 Work-Related Travel (Employees)
Travel you do as part of your job, but not between home and your regular workplace.
Examples:
- Driving between multiple work sites
- Visiting clients or customers
- Picking up work supplies
- Attending work-related conferences
- Temporary work locations (short-term projects)
💼 Business Travel (Self-Employed)
Travel you do to earn business income (sole traders, partnerships, companies).
Examples:
- Delivering goods to customers
- Meeting with suppliers
- Visiting business properties
- Attending business networking events
- Travelling to bank for business deposits
❌ Common Misconception: Home to Work
Many people incorrectly claim the trip from home to their regular workplace. The ATO considers this private travel, even if:
- You work long hours or start early
- You live far from work
- Public transport isn't available
- You work from home sometimes
Exception: You CAN claim home to work if you're carrying bulky tools or equipment that can't be stored at work.
Record Keeping Requirements
The ATO requires you to prove your claim if audited. Here's what you need to document:
Required Records
Date of trip
When the travel occurred (day/month/year)
Number of kilometres travelled
Odometer readings or GPS distance
Purpose of trip
Why the travel was work-related (e.g., "Client meeting at XYZ Corp")
Start and end locations
Where you travelled from and to
⚠️ How Long to Keep Records?
The ATO requires you to keep records for 5 years from the date you lodge your tax return. If you claim $3,696 on your 2025-26 return (lodged Oct 2026), keep records until October 2031.
📱 Digital Record Keeping
The ATO accepts digital records! Apps like ReceiptClaimer automatically track:
- GPS-tracked distance for each trip
- Date/time stamps (can't be falsified)
- Purpose and destination (you enter once, reuse for common trips)
- Automatic calculation of deduction
Bonus: Generates ATO-compliant PDF reports you can send straight to your accountant or attach to your tax return.
Logbook Method vs Cents Per Kilometre
If you drive more than 5,000 km for work or want to claim more, you must use the logbook method. Here's how they compare:
| Feature | Cents Per Kilometre | Logbook Method |
|---|---|---|
| Maximum claim | 5,000 km ($4,400) | Unlimited (based on business %) |
| Record keeping | Simple (date, km, purpose) | Complex (12-week logbook + all receipts) |
| Receipts required | No | Yes (fuel, servicing, insurance, rego) |
| Calculation | km × $0.88 | Total car costs × business use % |
| Best for | Low-mileage workers | High-mileage workers, expensive cars |
💡 Which Method Should You Use?
Use cents per kilometre if: You drive less than 5,000 km for work, or you want minimal paperwork.
Use logbook method if: You drive more than 5,000 km, have an expensive car (depreciation is higher), or your actual costs exceed 88 cents per km.
Example: If you drive a $80,000 luxury car 15,000 km for work (70% business use), logbook method could claim $12,000+ vs $4,400 maximum with cents per km.
Common Mistakes to Avoid
❌ Claiming home to regular workplace
This is the #1 audit trigger. Unless you're carrying bulky tools, your commute is private travel.
❌ Claiming more than 5,000 km without logbook
You'll get caught. The ATO cross-checks your claim against your odometer and fuel receipts.
❌ Not keeping records "because it's under 5,000 km"
Even though you don't need receipts, you still need a record of trips (date, km, purpose).
❌ Estimating kilometres at tax time
"I probably drove 4,000 km" won't hold up in an audit. Keep contemporaneous records.
❌ Mixing methods in same year
Pick one method per car per year. Can't use cents per km for some trips and logbook for others.
Real-World Examples
Example 1: Rental Property Landlord
Name: Tom (owns 3 rental properties)
Trips: Monthly inspections, tenant meetings, maintenance visits
Annual distance: 2,400 km
Calculation:
2,400 km × $0.88 = $2,112
Tom uses ReceiptClaimer's mileage tracker to log each trip. When his accountant asks, he exports a PDF report showing all 36 trips (date, property address, purpose, km). Takes 2 minutes.
Example 2: Tradesperson (Electrician)
Name: Lisa (mobile electrician)
Trips: 3-5 client sites per day, supplies pickup
Annual distance: 18,000 km (80% business use)
Decision: Use logbook method (exceeds 5,000 km limit)
Calculation:
- Total car costs: $15,000 (fuel, insurance, servicing, rego, depreciation)
- Business use: 80% (from 12-week logbook)
- Deduction: $15,000 × 80% = $12,000
Compare: Cents per km method would only claim $4,400 (5,000 km max). Lisa claims $7,600 more by using logbook!
Example 3: Sales Representative
Name: James (regional sales manager)
Trips: Client visits, trade shows, supplier meetings
Annual distance: 4,800 km
Calculation:
4,800 km × $0.88 = $4,224
James stays just under the 5,000 km limit. He uses his phone's GPS to track trips automatically. No logbook needed, no receipts required, claim approved in audit.
Summary: Key Takeaways
- 2025-26 ATO rate: 88 cents per kilometre (up from 85¢ last year)
- Maximum claim: 5,000 km ($4,400) using cents per kilometre method
- No receipts needed: 88¢ covers fuel, servicing, insurance, rego, depreciation
- Must keep records: Date, km, purpose, locations (for 5 years after lodging)
- Can't claim: Home to regular workplace (private travel, even if inconvenient)
- Use logbook if: You drive more than 5,000 km or want to claim higher amounts
Frequently Asked Questions
Q: Can I claim both cents per km and actual expenses?
No. You must choose one method per car per year. Can't mix methods.
Q: What if I use my car for both Uber and work travel?
Track work and Uber separately. Uber is business income (different rules). Work travel uses cents per km or logbook.
Q: Can I claim if my employer reimburses some trips?
Only claim trips NOT reimbursed. If employer pays you 70¢/km, you can't claim the 18¢ difference (ATO rules).
Q: Do electric vehicles get a different rate?
No. 88 cents per km applies to all cars (petrol, diesel, hybrid, EV). The rate averages costs across all vehicle types.
Q: Can I backdate claims if I forgot to track?
Technically yes (within 2 years), but you need contemporaneous records. "I think I drove X km" won't work in an audit. Best to start tracking now.