Vehicle Expenses for Business
How to claim business vehicle costs, with the 2026 CCA, interest and lease limits.
The short version
- Self-employed people can deduct the business-use share of vehicle costs: fuel, insurance, repairs, licence and registration, loan interest or lease payments, and capital cost allowance.
- The share comes from a logbook: business kilometres divided by total kilometres. No log, no claim, in most CRA reviews.
- Driving from home to your regular place of business is personal. Driving from a home office to clients and job sites is business.
- 2026 limits for passenger vehicles: CCA on up to $39,000 of cost ($61,000 for zero-emission), interest up to $350 a month, leases up to $1,100 a month (before tax).
- Pickup trucks and vans used more than half for hauling goods or equipment may escape those limits.
Vehicle Expense Tax Deductions Canada
The truck is often the second-biggest expense in a trade business, after labour. It's also the claim CRA cuts most often, because almost everyone drives their work vehicle home, to the cottage and to Costco. The rules aren't hard. You just have to prove the split.
How the Claim Works
- Add up the year's costs: fuel, oil, maintenance and repairs, insurance, licence and registration, parking for business, and either loan interest or lease payments.
- Work out business use: business kilometres from your logbook divided by total kilometres from your odometer readings.
- Multiply the costs by that percentage.
- Add capital cost allowance on the vehicle (if owned), at the business-use percentage.
Example: $9,000 of costs, 20,000 km driven, 14,000 km for business. Business use is 70%, so $6,300 is deductible, plus 70% of the CCA. At a 30% marginal rate plus CPP, that deduction is worth well over $2,000 a year; see how much to save for taxes.
2026 Limits for Passenger Vehicles
| Limit | 2026 |
|---|---|
| CCA ceiling (class 10.1), cost before tax | $39,000 |
| CCA ceiling for zero-emission passenger vehicles (class 54) | $61,000 |
| Deductible interest on a vehicle loan | $350 a month |
| Deductible lease cost (new leases) | $1,100 a month, before tax |
A passenger vehicle is most cars, SUVs and minivans, and pickups or vans not used mainly for hauling. A pickup, van or similar vehicle used more than 50% for transporting goods or equipment, or 90%+ for business, can be a motor vehicle instead, which avoids these limits. A work truck full of tools usually qualifies; a crew cab driven mostly by the family usually doesn't.
What can you deduct for your vehicle?
Tell the assistant the vehicle, how you paid for it, total and business kilometres and the year's costs. It works out the deduction, the CCA, and which 2026 limits apply.
Business Driving vs. Personal Driving
| Business | Personal |
|---|---|
| From your home office to a client, job site or supplier | From home to your shop or office, if that's your regular workplace |
| Between job sites during the day | Errands, school runs, the cottage |
| To the bank or supplier for the business | Driving that mixes personal stops in, for the personal part |
The Logbook
CRA expects a log showing date, destination, purpose and kilometres for each business trip, plus odometer readings at the start and end of the year. Once you have a full year's log, you can use a three-month sample in later years if your business use stays within 10% of that base year. Details are on CRA mileage log. Driving for an app? See rideshare taxes and delivery driver taxes for what counts as business kilometres.
Corporations and Employees Are Different
This page is for sole proprietors and partners. Employees who drive for work need a T2200; see employment expenses. If a corporation owns the vehicle, there are taxable benefit rules for personal use; see corporate vehicle expenses. The other business expenses are on business expense deductions. The GST/HST you pay on a business vehicle has its own rules; see GST/HST on vehicle purchases.
Get your GST/HST set up right the first time
The GST/HST SmartFile runs both $30,000 tests on your sales, compares the quick method with the regular method, and fills in form GST74 if the quick method wins.
Before filing, Return Check compares your vehicle claim with your other expenses and flags business-use percentages CRA often questions. All expense lines are on T2125 explained.
Vehicle Expense Questions
How do I calculate vehicle expenses for my business?
Total the year's vehicle costs and multiply by your business-use percentage (business kilometres divided by total kilometres from your logbook), then add capital cost allowance at the same percentage.
What are the 2026 vehicle limits for CCA, interest and leasing?
For passenger vehicles: CCA on up to $39,000 of cost ($61,000 for zero-emission vehicles), interest up to $350 a month, and lease costs up to $1,100 a month, before tax.
Is driving from home to work deductible?
Not if the trip is to your regular place of business. Trips from a home office that is your principal place of business to clients or job sites are business driving.
Do pickup trucks have the same limits?
Not always. A pickup used more than 50% to transport goods or equipment may be a motor vehicle rather than a passenger vehicle, so the CCA, interest and lease limits do not apply.
Sources: Finance Canada, 2026 automobile deduction limits; CRA, Motor vehicle expenses. Checked October 2026. The passenger vs motor vehicle definitions are summarized.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.