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IRD Kilometre Rate Calculator

Work out your 2025-26 vehicle expense claim under IRD's kilometre rate method — no fuel receipts or depreciation schedule required.

01INPUTS
Kilometre Rate Calculator

Enter your total kilometres for the income year (business + private combined), your business-use percentage, and vehicle type. The first 14,000 km of total travel is Tier 1; everything beyond is Tier 2.

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02RESULTS

Total kilometre-rate claim

$11,412.00

Petrol · 2025-26 rates

Tier 1 claim

$10,080.00

8,400 km @ $1.20/km

Tier 2 claim

$1,332.00

3,600 km @ $0.37/km

03BREAKDOWN
Tier breakdown
TierTotal km in tierBusiness km (60%)RateClaim
Tier 1 (first 14,000 km total)14,000 km8,400 km$1.20/km$10,080.00
Tier 2 (beyond 14,000 km total)6,000 km3,600 km$0.37/km$1,332.00
Total claim$11,412.00

Tier 1 and Tier 2 are determined by TOTAL kilometres (business + private) driven in the income year, not business kilometres alone. The business proportion is then applied within each tier.

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Kilometre rates reference table

Rates in dollars per kilometre, published by IRD via Operational Statement OS 19/04 (KM 2026) for 2025-26 (instrument made 2 June 2026, published 5 June 2026), and IRD's prior news item for 2024-25.

Vehicle type 2025-26 Tier 1 2025-26 Tier 2 2024-25 Tier 1 2024-25 Tier 2
Petrol $1.20 $0.37 $1.17 $0.37
Diesel $1.30 $0.38 $1.26 $0.35
Petrol hybrid $0.90 $0.24 $0.86 $0.21
Electric $1.22 $0.23 $1.08 $0.19

Tier 1 covers the first 14,000 km of TOTAL (business + private) travel in the income year; Tier 2 covers every km beyond that.

How the kilometre rate works

IRD's kilometre rate lets individuals — sole traders, partners, and trust beneficiaries — claim motor vehicle expenses on a simplified per-km basis instead of tracking every fuel receipt, insurance premium, and depreciation schedule. The rate has two tiers, split by total kilometres driven (business + private), not business kilometres alone.

  • Tier 1 covers the first 14,000 km of total travel. This higher rate absorbs fixed costs — depreciation, registration, insurance, and loan interest — that you incur whether the vehicle is driven or not.
  • Tier 2 covers every km beyond 14,000. This lower rate reflects running costs only — fuel, oil, tyres, incremental wear — since fixed costs are already covered by Tier 1.
  • Within each tier, you apply your business-use percentage to the kilometres in that tier, then multiply by the tier's rate.

Worked example

Driving 20,000 km total in 2025-26 with 60% business use (petrol):

  • Tier 1: 14,000 km × 60% = 8,400 km × $1.20 = $10,080
  • Tier 2: 6,000 km × 60% = 3,600 km × $0.37 = $1,332
  • Total claim (12,000 business km): $11,412

Who can use it, and record-keeping

Available to sole traders, partners in partnerships, and beneficiaries of trusts using a personally owned vehicle for business. Companies are excluded — they must use the actual cost method with FBT considerations if the vehicle is available for private use.

Even under the kilometre rate, you must substantiate your business kilometres with contemporaneous records — odometer readings at the start and end of the year, and a trip log (paper, spreadsheet, or app) showing date, purpose, and distance. IRD's standard fallback is a 90-day logbook kept once every three years, from which you derive your business-use percentage.

Kilometre rate vs actual cost method

Kilometre rate Actual cost
Substantiation Trip log / odometer only Every receipt + depreciation schedule
Best for Older vehicles, moderate–high business use New vehicles (heavy first-years depreciation), very high business use %
Who can use it Individuals only (not companies) Everyone, incl. companies
Admin effort Low High

As a rule of thumb: low business km (under ~5,000) tends to favour actual cost, since the kilometre rate ceiling is too low to absorb fixed costs efficiently. Kilometre rate tends to win for moderate-to-high business use on an older, mostly-depreciated vehicle; actual cost can pull ahead again for very high business use (95%+) on a newer vehicle with substantial depreciation left.

Frequently asked questions

Does the 14,000 km Tier 1 cap apply to business kilometres or total kilometres?

Total kilometres — business and private combined. The first 14,000 km of total travel in the income year sits in Tier 1; everything beyond is Tier 2. You then apply your business-use percentage to the kilometres in each tier before multiplying by that tier's rate.

Can I switch between the kilometre rate and actual cost method?

Yes — you elect a method each income year, but you cannot mix methods for the same vehicle within the same year. Once you choose, that vehicle sticks with the chosen method for the full year. Switching is common when business-use percentage changes materially.

Why are companies excluded from the kilometre rate method?

The kilometre rate is a substantiation concession for individuals — sole traders, partners, and trust beneficiaries. Companies must use the actual cost method with full logbook substantiation, because company-owned vehicles are governed by FBT and depreciation rules under Income Tax Act 2007 subparts DE and FB, not the simplified per-km formula.

Can employees use the kilometre rate for reimbursement?

Yes — employers commonly use the IRD kilometre rate as a reasonable, tax-free benchmark for reimbursing employees who use a personal vehicle for work travel. If the employer pays no more than the IRD rate, the reimbursement is not taxable. This calculator models the individual/self-employed claim; for employer reimbursement policy, the same Tier 1/Tier 2 rates and 14,000 km rule apply per employee.

What does the kilometre rate actually cover?

A single per-km figure covering fuel and oil, registration and licensing, insurance, repairs and maintenance, tyres, depreciation, Road User Charges (diesel and EV), and — in Tier 1 only — loan interest on the vehicle. You don't separately deduct any of these costs on top of the rate.

When does IRD publish the kilometre rates?

IRD publishes kilometre rates for an income year only after that year ends — typically around June the following year, via an Operational Statement. The 2025-26 rates (1 April 2025 to 31 March 2026) were published via OS 19/04 (KM 2026) on 5 June 2026. Rates for 2026-27 won't be published until roughly June 2027.

Related reading

Sources: OS 19/04 (KM 2026) — IRD Tax Technical; Kilometre rates 2025-2026 — IRD; Claiming vehicle expenses — IRD. Last verified 11 July 2026.

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