D1 Work-related car expenses 2026

Things you need to know

To claim a deduction for work-related car expenses as an employee, you must have incurred the expenses in the course of your employment duties.

Car expenses include:

• decline in value
• registration
• insurance
• maintenance and cleaning costs
• repairs
• fuel costs.

Expenses you incurred must relate to a car you owned, leased or hired under a hire-purchase agreement. You don't need to be the registered owner but if you weren't, you must be able to show there was a private arrangement that made you the owner or lessee of the car. See, Expenses for a car you own or lease.

Expenses you incurred must also relate to work-related trips, such as travelling between workplaces. In very limited circumstances, where eligible, you can claim expenses you incurred for trips between home and work, see:

• Home is a base of employment.
• Transporting bulky tools and equipment.
• Itinerant or shifting places of work.

You can't claim a deduction for expenses you incurred for normal trips between your home and regular place of work.

If the travel is partly private, you can claim only the part that related to travel for a work purpose. For more information, see Trips you can and can't claim.

To calculate your deduction there are 2 methods, you must choose either:

• Cents per kilometre method
  • Claim a rate of 88c per kilometre for 2025–26 up to a maximum of 5,000 work-related kilometres.
• Logbook method – you can claim the work-related use percentage (using your logbook and odometer records) of all your car expenses.

You can use the method that gives you the largest deduction or is most convenient if you have appropriate records to support your claim.

If you received an award transport payment under an industrial law or award in force on 29 October 1986, see Award transport payments.

If you received assessable income from your work as an employee outside Australia, that is

• on a PAYG payment summary – foreign employment, you must claim work-related car expenses you incurred in earning that income at this question.
• not on a PAYG payment summary – foreign employment, you claim your deductions at question 20 Foreign source income and foreign assets or property.

For more information, see:

• Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses?
• Taxation Ruling TR 95/34 Income tax: employees carrying out itinerant work – deductions, allowances and reimbursements for transport expenses
• Practice Statement Law Administration PS LA 1999/2 Calculating joint car expense deductions.

What you can't claim at this question

You can't claim at this question any expenses relating to:

• expenses for a vehicle that isn't yours or isn't a car, such as
  • a motorcycle
  • vehicles with a carrying capacity of one tonne or more, or 9 or more passengers, such as utility trucks and minibuses.

However, you can claim the actual work-related costs you incurred on these vehicles in your tax return, at D2 Work-related travel expenses 2026.

What you need to answer this question

You'll need to know or reasonably estimate your work-related kilometres. Work-related kilometres are those you travelled in the car in the course of earning assessable income.

You may need:

• written evidence for your car expenses, such as receipts or invoices – this evidence must show the
  • name or business name of the supplier
  • amount of the expense or cost of the asset
  • nature of the goods or services you buy
  • date you buy the goods or services
  • date the document was produced
• your car logbook and odometer records
• a record that shows how the expenses related to earning your income and how you work out your claim – for example, calendar or diary entries or work trip details in a record keeping app.

For more information, see Calculating your car expense deductions and keeping records.

You need to keep records for 5 years (in most cases) from the date you lodge your tax return.

Deductions for decline in value (depreciation)

You can claim a deduction for the decline in value of the car, only if you:

• use the logbook method
• owned the car or hired it under a hire-purchase agreement.

If you leased a luxury car, for more information see Special circumstances 2026.

The cents per kilometre rate covers all your car expenses, including decline in value. You can't claim an additional deduction for any of your car expenses if you choose to use the cents per kilometre method.

If you're claiming a deduction for the decline in value of a car, see Guide to depreciating assets 2026.

Sold, disposed of, stolen or destroyed cars

You might need to make a balancing adjustment if you claim deductions for your car, and during 2025–26 either:

• you sold or otherwise disposed of your car
• your car was stolen or destroyed.

To work out the balancing adjustment, see Guide to depreciating assets 2026 – balancing adjustment rules for cars.

If you had a loss after making the adjustment, include your deduction for it at question D5. If you had a profit after making your adjustment, include it at question 24 in your supplementary tax return.

Switching between methods

You also make a balancing adjustment if, at a time before you disposed of the car, you switch between the 'cents per kilometre' and 'logbook' methods to claim your car expenses.

To work out the amount of the balancing adjustment, see Guide to depreciating assets 2026 – balancing adjustment rules for cars.

Completing your tax return

How you complete this question depends on the method you choose to work out your car expenses deduction, either:

• Cents per kilometre method
• Logbook method.

If you had more than one car and you're claiming expenses under both methods, add the amounts you work out under each method and write the total at question D1 in your tax return.

Print the code letter for the method that gave you the largest amount in the Claim type box beside the amount.

Cents per kilometre method

For 2025–26, the cents per kilometre method:

• allows you to claim a set rate for each work-related kilometre – 88c per kilometre for all cars.
• applies for a maximum of 5,000 work-related kilometres per car, per year.

You don't need written evidence, but you need a record that shows how you work out your work-related kilometres. See Calculating your car expense deductions and keeping records.

Follow the steps to calculate your deduction using the cents per kilometre method.

Step 1

Multiply the total work-related kilometres you travelled during 2025–26 (maximum of 5,000 km per car) by $0.88 (the cents per kilometre rate).

For example:

3,250 kms × $0.88 = $2,860

Step 2

If you're claiming for more than one car using this method, repeat the step 1 and add up all the amounts.

Step 3

Write the total at question D1 – label A. Print the code letter S in the Claim type box beside the amount.

Logbook method

For 2025–26, using the logbook method you claim the percentage of the expenses for the car that are work-related. Your expenses:

• include
  • running costs such as fuel, maintenance and repairs
  • interest or lease expenses
  • deductions for decline in value (depreciation)
• don't include:
  • capital costs, such as the purchase price of your car
  • the principal (money you borrow) to buy it
  • any improvement costs.

To use this method, you need a logbook where you have recorded your work-related trips for a continuous period of 12 weeks and the odometer readings for the logbook period. You also need the odometer reading at the start and the end of the period that you had the car during each income year you're using the logbook method. These records are used to work out your work-related use percentage.

You can keep an electronic logbook using the myDeductions tool in the ATO app, or keep a paper logbook.

You can claim fuel and oil costs based on either;

• your actual receipts or
• by making a reasonable estimate:
  • odometer records for the start and end of the period that you held the car during the income year
  • the fuel consumption of your car
  • the average cost of fuel for the year.

You need written evidence (such as receipts) for all other expenses for the car. See Calculating your car expense deductions and keeping records.

Follow the steps to calculate your deduction using the logbook method.

Step 1

Work out the total kilometres your car travelled during the income year and how many of these are work-related kilometres.

Divide the work-related kilometres by the total kilometres the car travelled in the income year, then multiply this by 100. This is your work-related use percentage.

If your use of the car during the income year is consistent with your travel during the logbook period and you haven't changed the number of cars you use for work-related purposes, you can use the work-related use percentage established by your logbook.

For example:

4,100 work-related kilometres ÷ 6,500 total kilometres = 0.63 × 100 = 63%

Step 2

Add up your total expenses. To work out the amount to include for decline in value, see Deductions for decline in value (depreciation).

Step 3

Multiply the amount at step 2 by your work-related use percentage from step 1 (or if the pattern of use of the car or number of cars you have used has changed then use the reasonable estimate you made).

Step 4

Write the amount at question D1 – label A. Print the code letter B in the Claim type box beside the amount.

Where to go next

• Go to question D2 Work-related travel expenses 2026.
• Return to main menu Individual tax return instructions 2026.
• Go back to question Total income or loss 2026.