Tax Planning
Maximizing Work-Related Deductions: The 2026 Cents-per-Kilometre Rate
Australia’s car expense deduction rules just got an uplift—learn how to apply the new cents-per-kilometre rate and make sure you’re fully claiming eligible work travel.
By NomadicTax Research Team • 5-8 min read • July 11, 2026
## What’s new?
From **1 July 2026**, the cents-per-kilometre rate for calculating work-related car deductions in Australia will be **91 cents per kilometre**. This includes a temporary **2 cent uplift** over the base rate of 89 cents. These are for those who choose the simplified “cents per kilometre method” for claiming car expenses. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
## Who can use this method?
- Eligible if you use your car for work-related travel (excluding commuting).
- Must be the vehicle owner or have written evidence of car use.
- No need to keep detailed logbooks when using this simplified method—only records of trips and odometer readings required under these rules.
## Calculating your deduction: example
Suppose you use your car for eligible work travel of **5,000 km** in the 2026-27 financial year, and you use cents-per-kilometre method. Your deduction would be calculated as:
> 5,000 km × **$0.91** = **$4,550**
Compare this with if you used detailed logbook method—the latter may yield a larger amount if car expenses (fuel, maintenance, depreciation) are high—but requires much more record keeping.
## Practical tips to maximize deductions
- Track only work-related trips—e.g. client meetings, work site visits—not daily commute.
- Keep notes of date, distance, and purpose of each trip—these could be useful in case of audit.
- If your total car expenses are high and you do a lot of travel, estimate both methods (cents-per-kilometre vs logbook) and choose the most beneficial for your tax situation.
- Don’t forget potential restrictions: certain vehicles may not be eligible, and private use must be excluded.
## Case study: Freelancer example
Mia is a graphic designer who travels to multiple client meetings per month across the city and sometimes to regional towns. In 2026-27, she drives 12,000 km, of which 8,000 km is work travel. Using cents per kilometre, Mia can claim:
> 8,000 km × $0.91 = **$7,280** deduction.
If her fuel, oil, maintenance, insurance and depreciation under logbook total $9,000 and eligible km is 40%, she would get $3,600—so cents-per-kilometre gives more for Mia in this scenario.
## Key takeaways
- The cents-per-kilometre rate update is **temporary uplift only for 2026-27**, but the base rate (89 c/k) will apply for future indexations. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/CentsperKilometreDeductionRateforCarExpenses?utm_source=openai))
- Always assess whether the simplified method or logbook method works best for your situation.
- Know the difference between work travel vs commuting—only the former counts under this method.