Under the cents per kilometre method, fuel is already included in the 88 cents per kilometre rate. You cannot separately claim fuel receipts on top. Under the logbook method, fuel costs may form part of your eligible actual car running costs, subject to your work-related use percentage.

July 3, 2026

Car Expense Tax Deductions Explained for 2026

Q: What is the logbook method?

The logbook method uses a continuous 12-week logbook to work out the work-related use percentage of your car. You then apply that percentage to your eligible actual car expenses, which may include fuel, servicing, repairs, registration, insurance, interest on a car loan and decline in value. This method can produce a larger deduction where work use or running costs are high.

Q: Can I claim car expenses if my employer reimbursed me?

Generally no. If your employer reimbursed the car expense, you usually cannot also claim it as a deduction in your tax return. You can only claim costs you personally paid and were not reimbursed for.

Q: Can ABN holders claim car expenses?

Yes, ABN holders and sole traders may be able to claim the business-use portion of car expenses where the travel relates to earning business income and appropriate records are kept. Private use must be separated from business use. Both the cents per kilometre method and the logbook method are available to sole traders.

Quick answer

You may be able to claim car expense tax deductions in your 2026 Australian tax return if you used your car for genuine work-related travel, paid the costs yourself, were not reimbursed, and have records to support the claim.

For the 2025–26 income year, the ATO cents per kilometre rate is 88 cents per eligible work kilometre, capped at 5,000 work-related kilometres per car.

The other main method is the logbook method, where you claim the work-related percentage of actual car running costs.

The trick is knowing which trips count.

Driving from home to your normal workplace is usually private. Driving between work sites, to clients, or for genuine work duties may be different.

Tax law. It gives with one hand and then asks for a logbook with the other.

GoTax helps Australians complete their tax returns online, with returns checked by registered tax agents before lodgement.

Start your 2026 tax return online with GoTax

When can you claim car expenses?

You may be able to claim car expenses when the travel is directly connected to earning your income.

Common examples include:

travelling between separate work locations
driving from your regular workplace to a client or customer site
travelling from one job site to another
attending work-related meetings away from your normal workplace
driving to collect work supplies or equipment
using your car for ABN, contractor or sole trader income
carrying bulky tools or equipment where strict conditions are met

The ATO explains this in its guide to trips you can and can’t claim.

The key issue is whether the trip is part of your work, not just travel to get to work.

That small difference causes a large number of tax mistakes.

When can’t you claim car expenses?

You usually cannot claim ordinary travel between your home and your normal workplace.

That is called commuting. The ATO has been ruining that party for years.

You also generally cannot claim:

Expense or trip	Why it is a problem
Driving from home to your regular workplace	Usually private travel
Driving home from your regular workplace	Usually private travel
Personal errands during the day	Private use
School drop-off on the way to work	Private use
Weekend private driving	Private use
Costs your employer reimbursed	You did not bear the cost
Fines or penalties	Generally not deductible
Claiming both methods for the same car	You must choose one method

If your claim sounds like “I drove there because work was there,” that is probably not enough.

If your claim sounds like “I drove from work to a client site because my job required it,” now we may have something.

The two main car expense methods

For individual taxpayers, the two main methods are:

Method	Best for
Cents per kilometre	Simpler claims up to 5,000 eligible work kilometres
Logbook method	Higher work-use vehicles or larger actual running costs

You choose the method that applies best to your circumstances.

You cannot claim both methods for the same car in the same income year.

That would be double dipping. The ATO dislikes double dipping unless it involves chips, and even then it probably wants records.

Method 1: Cents per kilometre

The cents per kilometre method is the simpler method.

For the 2025–26 income year, the ATO’s cents per kilometre method uses 88 cents per eligible work kilometre.

The maximum claim is 5,000 work-related kilometres per car.

Work-related kilometres	Calculation	Deduction
500 km	500 × $0.88	$440
1,500 km	1,500 × $0.88	$1,320
3,000 km	3,000 × $0.88	$2,640
5,000 km	5,000 × $0.88	$4,400

The cents per kilometre rate covers car running costs such as fuel, servicing, registration, insurance and decline in value.

You do not need fuel receipts for this method.

But that does not mean you need no evidence.

You still need to show how you worked out your eligible work-related kilometres.

Useful records may include:

diary entries
work calendar
rosters
job sheets
client visit records
delivery records
odometer notes
employer records
appointment logs

The cents per kilometre method is simple. It is not magical.

“5,000 kilometres because that is the maximum” is not a calculation. It is a confession wearing sunglasses.

Method 2: Logbook method

The logbook method can produce a larger deduction where you have high work use or high running costs.

The ATO’s logbook method requires you to keep proper records of your car use.

Broadly, you keep a logbook for a continuous 12-week period and use that to calculate your work-related use percentage.

Then you apply that percentage to your actual car expenses.

Example:

Item	Amount
Total car expenses	$8,000
Work-related use from logbook	60%
Deductible amount	$4,800

Under the logbook method, you may be able to include expenses such as:

fuel
servicing
repairs
registration
insurance
tyres
interest on a car loan
decline in value
car washing where genuinely work-related
tolls and parking for eligible work trips

You need records.

That means receipts, invoices, odometer readings and a proper logbook.

Not “I think it was about 60% work.”

That is not a logbook. That is a hunch with ambition.

Cents per kilometre vs logbook: which is better?

The better method depends on your work use, actual costs and records.

Situation	Likely better method
Low work kilometres	Cents per kilometre may be simpler
Under 5,000 eligible work km	Cents per kilometre may be enough
High work kilometres	Logbook may produce a better result
High car running costs	Logbook may produce a better result
Poor records	Cents per kilometre may be safer if km records exist
Strong records	Compare both methods

Here is the obvious approach:

Work out your eligible work kilometres.
Estimate the cents per kilometre deduction.
Add up your actual car costs.
Apply your logbook percentage if you have one.
Choose the better valid method.

The word “valid” is doing a lot of work there.

A bigger claim is not better if it cannot survive an ATO question.

Example: employee car expense claim

Sarah is an employee sales representative.

During the year, she drove:

from the office to client meetings
between client appointments
to a supplier to collect work materials
from home to her regular office

The client and supplier trips may be work-related.

The home-to-office travel is usually private.

Sarah calculates 2,200 eligible work kilometres using her calendar and diary records.

Using the cents per kilometre method:

2,200 km × 88 cents = $1,936 deduction.

That is clean, simple and supported.

Which is more than can be said for most glovebox receipt systems.

Example: contractor or ABN car expense claim

Jake is a sole trader who uses his car for business.

He drives to customer jobs, collects supplies, visits worksites and travels between job locations.

Because he uses the car heavily for business, the logbook method may give him a larger claim.

He keeps:

a 12-week logbook
odometer readings
fuel receipts
servicing receipts
insurance records
registration records
records of tolls and parking
notes separating private and business use

This lets him calculate a business-use percentage and apply it to actual car costs.

If you earn income under an ABN, read the GoTax ABN Tax Deductions Guide.

ABN deductions can be powerful, but they are not a “claim everything because I have an ABN” festival.

Can you claim travel from home to work?

Usually, no.

Travel between home and your regular workplace is generally private.

You may be able to claim home-to-work travel in limited situations, such as where you need to carry bulky tools or equipment and strict conditions are met.

But be careful.

The bulky tools exception is not a free pass for everyone with a laptop, lunchbox or emotional support clipboard.

The issue is whether:

the tools or equipment are bulky
they are required for work
there is no secure storage at work
the travel is genuinely connected to transporting the items

Normal commuting remains private.

The ATO’s guide to trips you can and can’t claim is worth checking before you claim.

Can you claim tolls and parking?

You may be able to claim tolls and parking where they relate to eligible work-related travel.

Examples may include:

parking at a client site
tolls while travelling between work locations
parking for a work-related conference
tolls for business deliveries
parking while visiting a customer for ABN work

You generally cannot claim parking or tolls for normal home-to-work travel.

Again, commuting is the villain.

It always is.

Can you claim fuel receipts?

Fuel receipts matter mainly for the logbook method.

Under the cents per kilometre method, the rate already covers running costs, including fuel. So you do not separately claim fuel on top.

Under the logbook method, fuel costs can form part of your actual car running costs, subject to your work-related use percentage.

Method	Fuel treatment
Cents per kilometre	Fuel is included in the fixed rate
Logbook method	Fuel may be included as part of actual costs
Reimbursed fuel	Generally not claimable by you
Private fuel use	Not deductible

Do not claim the cents per kilometre method and then add fuel receipts on top.

That is not tax planning. That is stacking the sandwich too high.

Can you claim repairs, tyres and servicing?

Under the logbook method, you may be able to claim the work-related portion of:

servicing
repairs
tyres
registration
insurance
fuel
oil
car washing
interest on a car loan
decline in value

But only the work-related percentage is deductible.

If your logbook says the car was 40% work-related, you generally apply that percentage to eligible costs.

You do not claim 100% because work made you tired and the car was there for you emotionally.

Can you claim a car loan?

You generally cannot claim the principal repayments on a car loan.

Under the logbook method, you may be able to claim the work-related portion of interest on the loan.

You may also be able to claim decline in value for the car, subject to the rules.

This area can get technical, especially for ABN holders, business vehicles and high-cost cars.

If unsure, get it checked before lodging.

GoTax reviews returns before lodgement, which helps avoid claims that look fine until the ATO starts reading them with a red pen.

What records do you need?

Your records depend on the method used.

For cents per kilometre

Keep records showing how you calculated your eligible work kilometres, such as:

diary entries
work calendar
job sheets
client records
delivery records
rosters
appointment notes
odometer estimates
employer records

You do not need a full logbook, but you still need a reasonable basis.

For logbook method

Keep:

a valid 12-week logbook
opening and closing odometer readings
total kilometres for the year
business and private trip records
fuel records
servicing receipts
repair receipts
insurance records
registration records
loan interest records
toll and parking records
calculations showing work-related percentage

If the records are weak, the claim is weak.

Simple. Annoying. True.

For broader record-keeping help, read the GoTax guide: EOFY Tax Records 2026

What if you lost your receipts?

If you use the cents per kilometre method, you do not need fuel receipts, but you still need kilometre records.

If you use the logbook method and lose receipts, the claim becomes harder.

Other records may help, such as:

bank statements
credit card records
supplier account history
service centre invoices
insurance documents
registration papers
app records
email receipts

A bank statement may show you paid money to a fuel station or mechanic. It may not prove enough by itself.

The ATO likes details.

It is practically a hobby.

Read the GoTax guide: Can You Claim Tax Deductions Without Receipts in 2026?

Common car expense mistakes

Car claims are a common problem area because the line between work and private use can get messy.

Avoid these mistakes:

Mistake	Why it causes trouble
Claiming home-to-work travel	Usually private
Claiming the full 5,000 km without records	Maximum is not automatic
Claiming both cents per km and fuel	Double dipping
Claiming reimbursed costs	You did not bear the cost
Claiming private trips	Not work-related
Using an old logbook after work use changed	Percentage may no longer be valid
Claiming all car costs with mixed private use	Must apportion
No odometer records	Weakens logbook claim
Guessing kilometres	Not a method

The ATO does not need your claim to be perfect poetry.

It needs it to be real, reasonable and supported.

Electric cars and hybrid vehicles

If you use an electric vehicle or hybrid vehicle for work, the same basic idea applies: only the work-related portion may be deductible.

But your records may look different.

Instead of only fuel receipts, you may need records such as:

home charging records
commercial charging receipts
odometer readings
logbook records
electricity cost calculations
work-use percentage
business trip records

EV claims can become technical quickly, especially where there is home charging, mixed private use or employer-provided vehicles.

The simple rule is still the same:

Claim the work-related part you can support.

Do not claim the “electricity feels expensive” part. That is not yet an ATO-approved method.

Where car expenses fit in your tax return

Car expenses are only one part of your broader deduction claim.

You should also check:

working-from-home expenses
phone and internet
tools and equipment
uniforms and protective clothing
self-education
union fees
professional memberships
donations
tax agent fees
income protection insurance
ABN expenses
rental property expenses

For the broader deductions guide, read: What Tax Deductions Can You Claim in Australia in 2026?

For the hub page, read: Tax Deductions Australia

How GoTax helps with car expense claims

GoTax is designed to make the car expense section less painful.

You work through the online tax return.
You enter your car expense details.
You choose the correct method.
You include the records and calculations you have.
Your return is checked by registered tax agents before lodgement.

That means fewer missed deductions and fewer “that looked right at midnight” mistakes.

Start your 2026 tax return online with GoTax

Quick car expense checklist

Before lodging your 2026 tax return, check:

Did you use your car for genuine work-related travel?
Did you exclude normal home-to-work travel?
Were you reimbursed by your employer?
Did you choose cents per kilometre or logbook?
Do you have kilometre records?
Do you have a valid logbook if using that method?
Do you have odometer readings?
Do you have receipts for actual car costs?
Did you separate private and work use?
Did you include tolls and parking only where work-related?
Did you avoid claiming fuel on top of cents per kilometre?
Did you compare methods where possible?

The best car claim is not the biggest number.

It is the biggest number you can properly support.

Less exciting. More likely to survive.

Frequently asked questions

Can I claim car expenses in my 2026 tax return?

Yes, if the car travel was genuinely work-related, you paid the expense yourself, you were not reimbursed, and you have records to support your claim.

What is the cents per kilometre rate for 2026?

For the 2025–26 income year, the cents per kilometre rate is 88 cents per eligible work kilometre, capped at 5,000 work-related kilometres per car.

Do I need a logbook for the cents per kilometre method?

No, you do not need a full logbook for the cents per kilometre method. But you still need records showing how you calculated your eligible work-related kilometres.

What is the logbook method?

The logbook method uses a 12-week logbook to work out the work-related percentage of your car use. You then apply that percentage to eligible actual car expenses.

Can I claim travel from home to work?

Usually no. Ordinary travel between home and your regular workplace is generally private. Limited exceptions can apply, such as carrying bulky tools where strict conditions are met.

Can I claim fuel?

Under the cents per kilometre method, fuel is already included in the rate. Under the logbook method, you may be able to claim the work-related portion of fuel costs.

Can I claim tolls and parking?

You may be able to claim tolls and parking for eligible work-related trips. You generally cannot claim them for ordinary commuting.

Can I claim car expenses if my employer reimbursed me?

Generally no. If your employer reimbursed the cost, you usually cannot also claim it as a deduction.

Can ABN holders claim car expenses?

Yes, ABN holders may be able to claim the business-use portion of car expenses where the travel relates to earning business income and records are kept.

Does GoTax check car expense claims?

Yes. GoTax helps you complete your tax return online, and returns are checked by registered tax agents before lodgement.

About the Author

Written by Mark Walmsley, Chartered Accountant and Registered Tax Agent.