ATO Cents Per Kilometre Rate 2026–27: Why It Just Rose to 91 Cents
The ATO's cents per kilometre rate for work-related car expenses has gone up to 91 cents per kilometre for the 2026–27 income year, replacing the 88 cents per kilometre rate that applied for both 2024–25 and 2025–26. The change was registered by the Tax Office on 23 June 2026 (Legislative Instrument LI 2026/19) and applies to every kilometre you drive for work from 1 July 2026 onward.
If you're an employee claiming car expenses in your tax return, a sole trader, or a rideshare or delivery driver working under an ABN, this is the rate your 2026–27 claim will actually be calculated on — not the 88 cents you might remember from last year's return. The maximum of 5,000 business kilometres per car hasn't moved, which means the most you can claim under this method for a single car in 2026–27 is now $4,550, up from $4,400 the year before.
At the same time, the ATO also quietly lifted the car depreciation limit (the "car limit") to $69,883 for 2026–27. It's a separate figure that matters mainly if you're using the logbook method instead, but the two changes landed close together and it's easy to mix them up — so this guide walks through both, plus how to work out which method actually puts more money back in your pocket this year.
What's in This Guide
What Exactly Is the Cents Per Kilometre Method?
The cents per kilometre method is the simpler of the two ways the ATO lets you claim work-related car expenses — the other being the logbook method. Instead of keeping every fuel receipt, service invoice and insurance renewal for the year, you multiply the number of work-related kilometres you drove by a single flat rate the ATO sets each income year.
That flat rate is meant to cover everything: fuel, servicing, registration, insurance, tyres, and the car's decline in value. You can't then go back and claim fuel receipts on top of it — the rate is designed to be the whole claim for that car, not a starting point.
It's available to employees claiming a deduction in their individual tax return, and to sole traders and most gig economy drivers (Uber, DiDi, delivery apps) who use a car for their business. What it's never meant to cover is the ordinary drive between home and your regular workplace — that's still private travel in the ATO's eyes, rate change or not.
The New 2026–27 Rate: 91 Cents, and How We Got Here
Here's how the rate has moved over the last few income years, so you can see how big a jump this actually is:
• 2019–20: 68 cents per kilometre
• 2020–21 and 2021–22: 72 cents per kilometre
• 2022–23: 78 cents per kilometre
• 2023–24: 85 cents per kilometre
• 2024–25 and 2025–26: 88 cents per kilometre
• 2026–27: 91 cents per kilometre
The 91-cent rate comes from the Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2026, made by the Commissioner on 22 June 2026 and registered the following day. It's a 3-cent increase on the rate that had already been sitting still for two income years in a row, which tells you the ATO judged running costs had moved enough over 2024–25 and 2025–26 to warrant catching up in one step rather than a smaller annual adjustment.
If you're lodging your 2025–26 tax return right now (due by 31 October 2026 unless you're using a registered agent), you still use the 88-cent rate for that return — the 91-cent rate only applies to kilometres driven in the 2026–27 income year, the one that started on 1 July 2026 and that you'll be reporting on next year.
What 91 Cents a Kilometre Looks Like in Real Dollars
A few worked examples make this more concrete than the rate on its own:
A sales rep who drives between client sites. Say you log 2,400 work kilometres over the year, aside from your normal commute. At 91 cents, that's $2,184 — compared with $2,112 under last year's 88-cent rate. Not a huge jump, but it adds up when you're already close to the cap.
A tradie running between job sites in their own ute. If you're clocking up the full 5,000 kilometres the method allows, your claim moves from $4,400 last year to $4,550 this year — an extra $150, with no extra paperwork required.
A food delivery or rideshare driver. Gig economy drivers often rack up kilometres quickly, which is exactly why the 5,000km ceiling matters so much here — see the next section. If you're driving for Uber, DiDi or a delivery platform and your work-related kilometres are genuinely in the thousands, the logbook method will usually get you a far bigger deduction than the capped cents per kilometre method, since your car is doing so much of its driving for income. Our guide to Uber Eats and DoorDash tax deductions goes through this trade-off for delivery drivers specifically.
The 5,000-Kilometre Ceiling, and What Happens If You Go Over It
The cents per kilometre method caps out at 5,000 business kilometres per car, per year. That cap hasn't moved in years and it isn't indexed alongside the rate — it's a hard ceiling, not a guideline.
If your actual work-related driving goes beyond 5,000km, the method simply won't let you claim the extra kilometres. You have two options at that point: accept the $4,550 cap as your claim for that car, or switch to the logbook method and claim the actual business-use percentage of your real running costs instead — which, for a car doing a lot of genuine work kilometres, is very often the better outcome even with the extra record-keeping it demands.
One thing worth flagging early: the 5,000km cap applies per car, not per job. If you genuinely use two different cars for work during the year, each one gets its own 5,000km allowance under this method — but you'll need records showing which trips were in which car.
The Other 2026–27 Change: the $69,883 Car Limit
Separately from the cents per kilometre rate, the ATO's car limit — the maximum cost you can use as the depreciation base for a car — has also been updated for 2026–27, rising to $69,883 from $69,674 the year before, confirmed on the ATO's car thresholds page on 9 June 2026.
This figure doesn't touch the cents per kilometre method at all. It matters if you're using the logbook method and claiming depreciation on a car that cost more than the limit — you can only depreciate up to the car limit, regardless of what you actually paid. The same figure is also generally used as the GST credit limit for cars under Division 69 of the GST Act, which is relevant if you're GST-registered and bought a car for your business this year.
It's easy to see why the two figures get confused — they both update around the same time of year and both relate to car expenses — but they do genuinely different jobs. One sets your per-kilometre rate under the simple method; the other caps how much of a car's cost you can depreciate under the detailed method.
Cents Per Kilometre or Logbook — Which Wins This Year?
There's no single right answer, but a few questions tend to settle it quickly:
• How many work kilometres do you actually drive? Well under 5,000km a year, and still have room to grow? The cents per kilometre method is almost always simpler and close enough to the logbook result not to bother with 12 weeks of record-keeping.
• Is your work-use percentage high? If you use the car mostly for work — a tradie's ute, a rideshare driver's car — the logbook method usually claims more, because it's based on your actual running costs (fuel, servicing, insurance, depreciation up to the $69,883 limit, interest on a car loan) multiplied by your business-use percentage, rather than a flat rate capped at 5,000km.
• Do you already have a logbook running? A valid logbook period lasts for five years once you've kept one for 12 continuous weeks that's representative of your travel. If you've already done this, the logbook method often costs you nothing extra to use again this year.
For a full walk-through of how the logbook method itself works — what counts as a valid 12-week period, what you need to record, and how the business-use percentage gets applied — see our definitive guide to the car logbook method.
What the ATO Still Wants You to Show, Even Without Receipts
"No receipts needed" doesn't mean "no records needed." The ATO still expects you to be able to show how you worked out your business kilometres — a reasonable, consistent basis, not a number plucked out of the air at tax time.
In practice, that usually means keeping a simple diary of work trips as you go — date, purpose, and approximate distance — or using a tool like the myDeductions feature in the ATO app, which lets you log trips as they happen. Odometer photos at the start and end of the year, combined with a note of regular work routes, can also help if you're ever asked to explain how you arrived at your total.
What you're building towards is a reasonable estimate the ATO would accept as genuinely reflecting your work-related driving — not a formal logbook (that's only required for the logbook method), but also not a guess.
Mistakes We See Every Tax Season
• Counting the regular commute. Driving from home to your normal workplace and back is private travel, not work travel, even if you check emails in the car park first. There are narrow exceptions (carrying bulky tools with nowhere safe to leave them, travelling between two different workplaces in the same day), but "I drove to work" on its own doesn't qualify.
• Claiming cents per kilometre on top of logbook depreciation. You pick one method per car for the year — you can't blend a flat per-kilometre claim with an itemised fuel or depreciation claim on the same vehicle.
• Forgetting the cap applies per car, not per return. If you share driving between two cars for work, each car's 5,000km limit is tracked separately, with separate records for each.
• Using last year's 88-cent rate out of habit. It's an easy slip when you've claimed the same way for two years running — but 2026–27 kilometres get valued at 91 cents, not 88.
Working It Out Yourself vs Having It Checked
For a lot of people, the cents per kilometre method is genuinely simple enough to do without help — multiply your kilometres by 91 cents, keep a basic record of how you got that number, and you're done. Where it's worth a second set of eyes is in deciding between the two methods in the first place, especially if your work driving has grown this year, if you've changed jobs or started a side hustle, or if you're not sure whether a particular trip counts as work-related at all.
Through our online tax return service, you send through your kilometre records (or logbook, if you have one) and a registered tax agent checks which method actually gets you the bigger, correctly substantiated claim before anything is lodged — rather than you finding out after the fact that you picked the less generous option.
Frequently Asked Questions
Is the cents per kilometre rate the same for everyone?
Yes — the 91-cent rate for 2026–27 applies the same way to employees, sole traders and gig economy drivers using this method. It doesn't vary by occupation, vehicle type or engine size, which is a change from how the old pre-2015 system worked.
Can I switch from the logbook method to cents per kilometre this year, or vice versa?
Yes, you can choose whichever method suits you best each income year for each car, as long as you meet that method's own requirements (for example, having a valid logbook if you want to use that method).
Does the 91-cent rate include GST?
The rate itself is a tax deduction figure for income tax purposes, not a GST calculation. If you're registered for GST and use this method for a business vehicle, talk to your agent about how any GST component is handled separately in your BAS.
What if I used more than one car for work during the year?
You can use the cents per kilometre method for more than one car, but the 5,000km cap applies separately to each car, and you need records showing which trips were made in which vehicle.
Does this rate apply to motorcycles as well?
No — the cents per kilometre method as described here is for cars. Motorcycles and other vehicles that don't meet the ATO's definition of a car are treated differently, generally under the actual-cost rules.
I only drove 1,200km for work this year — is it even worth claiming?
At 91 cents, 1,200km comes to $1,092, which is a meaningful deduction for most people's circumstances. It's worth claiming as long as you can show a reasonable basis for the number, even if you're well under the 5,000km cap.
Where can I check the current rate myself?
The ATO publishes the current cents per kilometre rate on its cents per kilometre method page, which is the most reliable place to confirm it for the income year you're claiming.
Is the car limit the same thing as the cents per kilometre rate?
No. The car limit ($69,883 for 2026–27) caps how much of a car's cost you can depreciate under the logbook method. The cents per kilometre rate (91 cents for 2026–27) is a completely separate flat per-kilometre rate used under the simpler method. They both changed around the same time this year, which is why they're easy to confuse.
Contact Baron Tax & Accounting
If you'd like a registered agent to check your car expense claim before you lodge, or you just have a question about this year's rate, you can reach us directly:
• Address: 758 Underwood Road, Rochedale South QLD 4123
• Phone: +61 7 3706 3147 or 1300 087 213
• Email: info@baronaccounting.com
• Hours: Monday to Friday, 9:30am - 5:00pm
You can also start online through our Online Tax Return service or visit our About Us page to learn more about our team.
Disclaimer: This article provides general information only and does not constitute personal tax or financial advice. It does not take into account your objectives, financial situation or needs. Tax rules change and apply differently to each person's circumstances. Before acting, please seek advice from a registered tax agent. Baron Tax & Accounting accepts no liability for any loss arising from reliance on this article. Source references: ATO (ato.gov.au) and other Australian government agencies, current as at the date of publication.
Comments