Tax Planning
Car Deductions Decoded: Making the Most of the 91¢/km Rate
With the 91 cents per kilometre deduction rate for 2026-27 now active, it’s time to plan carefully to maximise your deductions if you drive for work and aren’t reimbursed.
By NomadicTax Research Team • 5-8 min read • September 5, 2026
## What’s the 91¢/km Rate All About?
From **1 July 2026**, the ATO has determined the cents per kilometre rate for deductible work-related car use to be **91 cents per kilometre** for the 2026-27 income year. This reflects the base rate of 89 cents plus a temporary volley of 2 cents as a one-off uplift. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
This method is only available if you’re eligible and choose the **cents per kilometre method** to calculate your deductions. It doesn’t apply to all car expenses—only those related to work travel, where you meet the eligibility requirements. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
## Who Can Use This Method?
You may use this method if:
- You use your car for work (not including commuting);
- You know or can show your work-driven kilometres;
- You meet documentation and logbook requirements if required (often a self-contained record of kilometres driven for work);
- You haven’t already claimed actual costs under another method.
If you travel between job sites, meet clients, or use your vehicle to perform your work duties—for example, tradies, sales agents, consultants—this method might suit you.
## How It Compares to Actual Cost Method
| Aspect | Cents per km method | Actual cost method |
|--------|---------------------|----------------------|
| Ease | Simple calculation, low record keeping (just odometer or estimates of km, may need logbook if over limits) | Needs receipts, maintenance, registration, depreciation, fuel — more complex |
| Amount usually claimed | May be lower or higher depending on how much you drive | Can capture more costs but requires more effort and risk of challenge if over-stated |
## Example Scenarios to Illustrate
- Emma is a real estate agent who visits clients daily, driving about **25,000 km/year**. Using the cents per km method at 91c/km, her deduction would be **$22,750**. If her actual costs of owning and operating the car (fuel, servicing, insurance, depreciation, tyres) total **$20,000**, the cents per km method gives her better value.
- Mark is a software consultant who drives only occasionally between client locations, total ~2,000 km/year. At 91c/km, deduction is **$1,820**. His total actual cost under the receipts method might be $5,000, so actual cost method is better for him.
## Practical Tips to Maximise the Deduction
- Keep detailed work-kilometre records, even if not required—they help support estimates and claims.
- Identify non-eligible trips (commuting) and exclude them carefully.
- Check whether using the cents per km method limits your ability to use actual cost in other years.
- Plan vehicle use: more work-related driving in a year may make the cents per km method worthwhile.
- Understand ATO expectations: consistent and reasonable estimates, or a logbook if needed.
This simple method is often overlooked—especially by workers for whom actual costs exceed 91c/km—but for many, it's the path of least resistance to get a valid deduction without a pile of paperwork.