If you use your own car for work, you can claim a car expenses tax deduction using one of two ATO methods. The cents per kilometre method pays a flat 88 cents for every work-related kilometre in 2025-26, capped at 5,000 km per car (a maximum deduction of $4,400) with no receipts needed. The logbook method lets you claim your actual running costs, including depreciation (decline in value), multiplied by your work-use percentage from a 12-week logbook. High-kilometre drivers usually do better with a logbook; occasional work drivers usually do better with cents per km. Both rates and rules below are confirmed against the ATO's current pages for the 2025-26 income year.
Not sure the car is your biggest deduction? Run your job through our deduction finder to see everything you can claim, then check what the refund does to your take-home pay with the pay calculator.
Who can claim car expenses on tax
The ATO sets four conditions before either method is available, per its expenses for a car you own or lease page:
- The vehicle must be a car. That means a motor vehicle carrying a load under one tonne and fewer than 9 passengers including the driver. Electric vehicles (EVs), plug-in hybrids and hybrids count if they fit that definition. Motorcycles and one-tonne-plus utes do not; they fall under different rules.
- You must own, lease or hire-purchase the car. A car under a salary sacrifice or novated lease is leased by your employer, so you cannot claim its running costs (you can still claim work-related parking and tolls). A family member's car can qualify if a private arrangement effectively makes you the owner, even if the registration has not been updated.
- The trips must be work-related. Trips between workplaces or to perform your duties count. The ordinary commute between home and work does not, except in limited circumstances.
- You paid the costs yourself and were not reimbursed. If your employer pays you a car allowance instead, you declare the allowance as income and claim your actual deduction against it.
Cents per km vs logbook: which method pays you more
Cents per kilometre method. Multiply your work-related kilometres by 88 cents for 2025-26 (the same rate applied in 2024-25; it was 85 cents in 2023-24). You can claim a maximum of 5,000 work-related kilometres per car per year, so the deduction tops out at $4,400. The rate covers everything: fuel, registration, insurance, servicing and decline in value. You cannot add any car costs on top. Source: ATO cents per kilometre method.
Logbook method. Keep a logbook for at least 12 continuous weeks that is broadly representative of your travel, work out your work-use percentage, then claim that percentage of your actual car expenses: fuel or electricity, servicing, registration, insurance, loan interest and decline in value. There is no kilometre cap. Source: ATO logbook method.
Worked example: same driver, two methods
Priya is a sales rep who drove 15,000 km in 2025-26, of which 6,000 km were work-related (a 40% work-use percentage from her logbook).
- Cents per km: her 6,000 work kilometres are capped at 5,000, so the claim is 5,000 x $0.88 = $4,400.
- Logbook: her actual costs were $3,200 fuel, $950 registration, $1,350 insurance, $1,500 servicing and tyres, $1,000 car loan interest and $4,500 decline in value, totalling $12,500. Her claim is $12,500 x 40% = $5,000.
The logbook method pays Priya $600 more, and the gap widens the more work kilometres she drives. If she only drove 2,000 work kilometres, cents per km (2,000 x $0.88 = $1,760) would likely beat the logbook result and save the paperwork. You can use a different method for each car, and change methods between years for the same car. Model both against your own income with our tax calculators.
Records the ATO requires for each method
Cents per km: no receipts are needed, but you must be able to show you own the car and how you worked out your work kilometres, for example diary entries of your regular trips ("20 km round trip, once a week, 48 working weeks = 960 km") or the myDeductions tool in the ATO app.
Logbook: the requirements are stricter. Your logbook must cover at least 12 continuous weeks, record every work journey's purpose, destination, start and end odometer readings and kilometres, plus odometer readings for the start and end of the logbook period. A valid logbook lasts 5 years unless your circumstances change (new job, new home) and it stops being representative. You also keep receipts for fuel, registration, insurance, repairs and other costs (or a reasonable fuel estimate based on odometer readings), and records of the car's purchase price for the decline in value calculation. EV owners can use the ATO's home charging rate of 4.2 cents per kilometre instead of tracking electricity receipts. Keep everything for 5 years after the last year the logbook supports a claim.
If you buy an expensive car, decline in value is capped at the car limit, which is $69,674 for 2025-26, over an effective life of generally 8 years.
Car costs you cannot claim
- Home-to-work commuting, even if you live far away or do minor tasks on the way.
- The purchase price of the car itself and principal repayments on a car loan (only decline in value and loan interest are claimable under the logbook method).
- Any car expenses on top of the 88c rate if you use cents per km; the rate already includes them all.
- Kilometres beyond the 5,000 km cap under cents per km.
- Running costs for a salary-sacrificed or novated lease car.
- Expenses your employer reimbursed.
- Parking fines and speeding fines, in any circumstances.
Note that parking fees and tolls for work trips are claimable, but as travel expenses rather than car expenses.
Car expenses tax deduction FAQs
What is the cents per km rate for 2025-26?
88 cents per kilometre, unchanged from 2024-25. It was 85 cents in 2023-24 and 78 cents in 2022-23. The ATO publishes the current rate on its cents per kilometre method page.
Can I claim more than 5,000 km?
Not under cents per km; the cap is 5,000 work kilometres per car per year. If you genuinely drive more for work, keep a 12-week logbook and use the logbook method, which has no cap. If two joint owners use the same car for separate income-earning purposes, each can claim up to 5,000 km.
Can I claim driving from home to work?
Generally no. The ATO treats the ordinary commute as private travel even if you work overtime or run work errands on the way. Limited exceptions exist, such as carrying bulky tools you cannot securely store at work, or travelling between two separate workplaces.
Do I need receipts for the cents per km method?
No. You need records showing how you calculated your work kilometres (a diary or the ATO app) and evidence you own the car. Receipts for fuel and other costs are only required under the logbook method.
How long does a logbook last?
Five years, provided your travel pattern stays broadly the same. In each of the four years after the logbook year, record your odometer readings at the start and end of the year and apply your logbook percentage. Start a new 12-week logbook if your work travel changes significantly.
Can I switch methods each year?
Yes. You can choose whichever method gives the bigger deduction each income year, and use different methods for different cars in the same year.
Ready to see the dollars? Estimate your car claim alongside your other deductions with the deduction finder, then run the result through the pay calculator to see your refund.