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Car expense calculator

Cents Per Km Calculator (Australia)

Enter your business kilometres and income to see your car expense deduction under the ATO cents per km method (88c per km for 2025-26), and the tax it saves you. Free, no signup.

Free, no signupATO 88c per km rate2025-26 income year
Business kilometres
Kilometres driven for work in your own car. Capped at 5,000 per car.
km
Your tax rate
Used to work out your marginal tax rate
$
A deduction lowers your taxable income, so it trims the Medicare levy too. Tick this to add 2% to your saving.
Your car expense deduction
$3,520.00
4,000 km × 88c per km
Kilometres entered4,000 km
Kilometres you can claimunder the 5,000 km limit4,000 km
RateATO, 2025-2688c / km
Total deduction$3,520.00
Your marginal tax rateon taxable income of $85,00030%
Estimated tax savingdeduction × 30%$1,056.00
Add the 2% Medicare levy and your saving rises to about $1,126.40. Tick the box on the left to include it.
The deduction is what you claim; the saving is roughly what it puts back in your pocket. Estimate on the 88c 2025-26 ATO rate, a guide, not tax advice. Verify at ato.gov.au.
Simon Chadwick
Simon Chadwick
Founder, Orbit Money
Method: ATO cents per km method (88c/km)Updated: 16 July 2026Sources: ato.gov.au

How the cents per km method works

If you use your own car for work, the ATO cents per km method is the simplest way to claim a deduction. You claim a flat 88 cents for every work-related kilometre you drive in the 2025-26 income year. The maths is one line. Multiply your business kilometres by 88c and that is your deduction. Drive 4,000 kilometres for work and 4,000 at 88c gives a $3,520 deduction.

A deduction is not cash back. It lowers your taxable income, and the tax you save is that deduction multiplied by your marginal rate. On a $85,000 income the marginal rate is 30%, so a $3,520 deduction saves about $1,056 in tax. Add the 2% Medicare levy and it is closer to $1,126. The calculator above shows both the deduction and the estimated saving for your own kilometres and income.

The 5,000 kilometre cap

The cents per km method covers a maximum of 5,000 business kilometres per car, per year. That caps the deduction at 5,000 times 88c, which is $4,400. You do not need receipts for your car running costs to use it, but you do need a reasonable basis for the number of kilometres, such as a diary of your work trips or a regular travel pattern the ATO can check. If your genuine work kilometres are well above 5,000, the logbook method has no cap and may give you a larger deduction.

What the 88c rate covers

The rate rolls all your car running costs into one figure, so you cannot claim these again anywhere else in your return:

Covered by the rateWhat it includes
FuelPetrol, diesel or electricity to run the car
Servicing and repairsMaintenance, tyres and mechanical work
Registration and insuranceRego and your car insurance premium
DepreciationThe decline in value of the car itself

Because everything is baked into the 88c, you cannot add fuel or servicing on top. That is the trade-off for not keeping receipts. If your real costs are high, compare the result with the logbook method before you lodge.

Cents per km rate by year

The ATO sets the rate each income year. Use the rate that matches the year you are claiming for:

Income yearRate per kmNotes
2026-2791 centsFrom 1 July 2026
2025-2688 centsCurrent income year
2024-2588 centsYear ending 30 June 2025
2023-2485 centsPrior year
2022-2378 centsPrior year

How to use this calculator

  1. Enter your work-related kilometres for the year (the tool caps the claim at 5,000).
  2. Set your tax rate, either from your annual income or by picking a marginal rate.
  3. Read your deduction (kilometres times 88c) and the estimated tax it saves.
  4. Tick the 2% Medicare levy box to see the slightly larger saving it adds.

Frequently asked questions

How do you calculate cents per km?
Multiply your work-related kilometres by the ATO rate for the year. For 2025-26 the rate is 88 cents per kilometre. Drive 4,000 business kilometres and your deduction is 4,000 times 88c, which is $3,520. The method covers up to 5,000 business kilometres per car per year, so the most you can claim this way is 5,000 times 88c, or $4,400. The deduction lowers your taxable income; the tax it saves is the deduction multiplied by your marginal rate.
What is the ATO cents per km rate for 2025-26?
It is 88 cents per kilometre. The rate rose from 85c to 88c for the 2024-25 income year and stays at 88c for 2025-26 (the year ending 30 June 2026). From 1 July 2026 it rises to 91c for the 2026-27 year. The rate is a single flat figure that already covers your car running costs, including fuel, servicing, registration, insurance and depreciation, so you cannot claim those separately on top.
Can you claim 5,000 km without receipts?
The cents per km method does not need receipts for your car running costs, but it is not a free 5,000 km. You can only claim the work-related kilometres you drove, and you need a reasonable basis to show how you worked the number out, such as a diary of your work trips or a regular pattern of travel. The ATO can ask you to justify the figure. If your genuine work kilometres are above 5,000, the logbook method may give a larger deduction.
What counts as a work-related kilometre?
Trips you make in your own car for work, such as travelling between two workplaces, driving to see clients or suppliers, or going to a temporary work site. Normal travel between home and your regular workplace does not count; that is treated as private. If a trip is part work and part private, only the work portion is claimable. Keeping a short record of each work trip (date, reason, kilometres) gives you the reasonable basis the ATO expects.
Cents per km or logbook method, which should I use?
The cents per km method is simpler and needs no receipts, so it suits people with modest work travel of up to 5,000 kilometres. The logbook method has no kilometre cap and can give a bigger deduction if you drive a lot for work or run higher car costs, but it needs a 12-week logbook plus receipts for your actual expenses. Work out both if you are near the 5,000 km mark and use whichever gives the better result.
How much tax does a cents per km claim save?
The saving is your deduction times your marginal tax rate, not the whole deduction. A $3,520 deduction at a 30% marginal rate saves about $1,056 in tax. Add the 2% Medicare levy and it is closer to $1,126. The same deduction is worth more to a higher earner, because their marginal rate is higher. The calculator above shows both the deduction and the estimated saving for your own kilometres and income.

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Simon Chadwick
About the author
Simon Chadwick
Founder of Orbit Money

Simon is the founder of Orbit Money, a tool that helps people track subscriptions and recurring spend. He builds Orbit's free money calculators and writes about personal finance for Australian and UK readers.

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This tool is a guide, not tax advice.