Work-Related Car Expenses: 88 Cents vs Logbook (2025-26)
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Primary tax-year context: 2025-26
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General information only. Speak with a registered tax agent for advice.
If you use your own car for work purposes, the ATO allows you to choose between two methods when lodging your tax return: the cents-per-kilometre method or the logbook method. For 2025-26, the cents-per-kilometre rate is 88 cents per km. This article explains both methods and helps you work out which produces the better outcome for your situation.
Cents per kilometre: how it works
The cents-per-kilometre method is the simpler of the two. You multiply your total work-related kilometres by 88 cents — up to a maximum of 5,000 kilometres per car.
- Maximum deduction: 5,000 km × $0.88 = $4,400
- Receipts required: None for the kilometres themselves, but the ATO can ask how you calculated the number of kilometres claimed. A diary, calendar, or log of work trips is good practice.
- What it covers: The rate is meant to cover all running costs — fuel, servicing, insurance, registration, and depreciation. You cannot claim these separately on top of the cents-per-km deduction.
- No logbook required: You do not need to keep a 12-week logbook to use this method.
The cents-per-km method suits people who drive a modest number of work kilometres, have a lower-value car, or want a simpler approach at tax time.
Logbook method: how it works
The logbook method requires more record-keeping, but removes the 5,000 km cap and can produce a much larger deduction.
You keep a logbook for 12 continuous weeks that records every trip (date, odometer readings, purpose). This establishes your business-use percentage. You then apply that percentage to your actual car running costs for the full year.
Running costs you can claim a share of:
- Fuel and oil
- Registration
- Insurance
- Servicing and repairs
- Tyres
- Depreciation (decline in value)
- Interest on a car loan
- Roadside assistance membership (e.g. NRMA, RACV)
Records required:
- The 12-week logbook (valid for 5 years unless your pattern changes)
- Odometer readings at the start and end of each income year
- Receipts and invoices for all running costs
The logbook method suits high-km drivers, people with expensive cars, or anyone whose work travel clearly exceeds what the 5,000 km cap allows.
Side-by-side comparison
| Feature | Cents per km | Logbook |
|---|---|---|
| Rate (2025-26) | 88 cents/km | Actual costs × work % |
| Km cap | 5,000 km/year | No cap |
| Maximum deduction | $4,400 | Unlimited |
| Receipts for running costs | Not required | Required |
| Logbook required | No | Yes (12 weeks, valid 5 years) |
| Odometer records | Not required | Required at year end |
| Best for | Low km, simple claims | High km or expensive cars |
Which method is better for you?
The right choice depends on your kilometres and your car’s running costs. Here are the most common scenarios:
| Your situation | Better method | Why |
|---|---|---|
| Under 5,000 work km, modest car | Cents per km | Simpler, comparable result |
| Over 5,000 work km | Logbook | No cap, larger deduction |
| Expensive car (over $30,000) | Logbook | Actual depreciation included |
| New to the workforce, occasional work travel | Cents per km | No logbook admin required |
| Multiple cars used for work | Either, per car | You can use a different method for each car |
Note: you choose your method each year. You are not locked in to the same method as the prior year, as long as you have the records to support your chosen method.
Worked example
Rachel drives 25,000 km per year, of which 14,000 km are work-related (56%). Her total car running costs for the year are $12,000.
Cents per km: 5,000 km (capped) × $0.88 = $4,400 deduction
Logbook method: $12,000 × 56% = $6,720 deduction
Rachel is $2,320 better off using the logbook method. At a 34.5% marginal rate (including Medicare levy), that translates to roughly $800 more in her refund.
For Rachel, the 12-week logbook investment is clearly worth it. For someone who drives 3,000 work km a year in a $15,000 car, the extra record-keeping of the logbook method is unlikely to change the outcome meaningfully.
What does NOT count as work-related car use
Both methods only cover travel that is genuinely work-related. The following do not qualify:
- Ordinary home-to-work commuting — travel between your home and your regular place of work is private travel.
- Personal errands on the way to or from work.
- Travel reimbursed by your employer — if your employer pays you back for kilometres, you cannot also claim a deduction.
Exceptions exist for some workers who carry bulky equipment they cannot store at work, or who have no fixed workplace — a registered tax agent can advise on these situations.
Claiming in myTax
In myTax, work-related car expenses appear under Work-related expenses → Work-related car expenses. You select your method (cents per km or logbook), enter the relevant figures, and myTax calculates the deduction. For the logbook method, have your running cost total and business-use percentage ready before you start.
Sources (verified)
Next step
- Estimate the net effect in the Tax Return Calculator
- Check how it affects your taxable income in the Income Tax Calculator