Our time-of-use electricity rates guide covers what charging actually costs you at home. This piece is about a different question entirely: what happens when someone else — an employer, or the CRA via a business deduction — is the one paying you back for driving, and why that works very differently depending on whether you're an employee or self-employed.
Quick answer: The CRA's 2026 per-kilometre allowance — 73 cents for the first 5,000 km driven for work and 67 cents per km after that (4 cents higher in the territories) — is specifically the tax-free rate an employer can pay an employee for using their personal vehicle for work. If you're an employee reimbursed at that flat rate in an EV, your actual electricity cost per kilometre is dramatically lower — often 2-3 cents/km — which means the allowance covers your real cost several times over. But if you're self-employed, you cannot use this flat per-km rate at all: the CRA requires you to deduct your actual vehicle expenses, including real electricity costs, multiplied by your business-use percentage, using Form T2125 and a detailed logbook. The flat-rate "EV math works in your favour" advantage effectively only exists for reimbursed employees, not the self-employed.
The rate itself, and who it's actually for
The CRA sets an annual per-kilometre rate specifically as the ceiling for tax-free reasonable allowances an employer can pay an employee for business use of their personal vehicle. For 2026, that's 73 cents per kilometre for the first 5,000 km driven for business purposes in the year, dropping to 67 cents per kilometre for every kilometre after that — with both figures 4 cents higher (77 cents and 71 cents) for employees working in the Yukon, Northwest Territories, and Nunavut. As long as an employer pays at or below this rate and the allowance is genuinely based on kilometres driven, the payment isn't considered a taxable benefit to the employee.
This is the number that gets cited constantly in EV-and-taxes content, and it's accurate as far as it goes — but it's frequently presented without the critical qualifier that it applies specifically to the employer-reimburses-employee relationship. It is not a general "this is what driving costs, claim this" figure available to any vehicle owner for any purpose.
Why this rate is unusually generous if you drive an EV
Here's the part that makes this genuinely interesting for EV owners specifically: the CRA's per-km rate was designed with the real costs of any vehicle in mind — fuel, maintenance, depreciation, insurance — averaged out, and it hasn't been adjusted downward to reflect the fact that an EV's per-kilometre running cost is substantially lower than a comparable gas vehicle's. If you're driving roughly 18 kWh per 100 km (a reasonable efficiency figure for a mid-size EV) and paying something like 12 cents per kWh for home charging, your actual electricity cost works out to roughly 2.16 cents per kilometre. Compare that to the 73-cent (or 67-cent) allowance, and an employee driving their own EV for work and getting reimbursed at the CRA rate is being paid more than 30 times their actual electricity cost per kilometre.
To be clear, that gap isn't pure profit in a vacuum — the allowance is meant to cover more than just energy costs; it's meant to compensate for the vehicle's overall wear, depreciation, insurance, and maintenance too, not just what it costs to charge it. But EVs also tend to have meaningfully lower maintenance costs than gas vehicles (our regenerative braking and brake wear piece and tire wear piece both touch on this), so the overall gap between real total cost-per-km and the CRA allowance genuinely tends to run in the EV-driving employee's favour compared to a gas-vehicle-driving colleague being reimbursed at the same flat rate.
Why self-employed EV owners don't get this same benefit
This is the distinction that gets missed most often, and it matters a lot if you're self-employed rather than an employee: the CRA's flat per-kilometre allowance is not an option available to self-employed individuals or sole proprietors claiming vehicle expenses on their own tax return. Instead, self-employed taxpayers must use the actual-expense method: track your real total vehicle costs for the year — in an EV's case, actual electricity costs (ideally metered or reasonably estimated from charging records), insurance, maintenance and repairs, licensing, and capital cost allowance (depreciation) — then multiply that total by your business-use percentage, calculated as business kilometres driven divided by total kilometres driven for the year. That calculation happens on Form T2125 (Statement of Business or Professional Activities), and it requires the same kind of detailed logbook either way: date, destination, purpose of the trip, and distance for every business trip, plus retained receipts for the actual costs you're claiming.
Practically, this means the "EV math is amazing" advantage that applies to reimbursed employees doesn't translate for the self-employed in the same way. A self-employed EV owner can still claim their genuinely low electricity costs as part of their actual vehicle expenses — and that's a real advantage over a self-employed gas-vehicle owner claiming much higher fuel costs — but they're claiming their actual lower cost, not receiving a flat allowance calculated as if their costs were much higher. There's no windfall built into the self-employed method the way there functionally is for a reimbursed employee.
The capital cost allowance angle for self-employed EV owners
One more EV-specific detail worth knowing if you're self-employed and claiming actual expenses: zero-emission vehicles get their own CCA class (Class 54) with a capital cost ceiling of $61,000 plus applicable sales tax for 2026 — meaning that's the maximum vehicle cost you can depreciate for tax purposes, even if your actual EV cost more. This ceiling is unchanged from 2025. If you're self-employed and the vehicle you're claiming CCA on cost more than that ceiling, the excess simply isn't eligible for depreciation deduction, regardless of how the vehicle is actually financed or what it's worth.
The bottom line
The CRA's 73-cent (67-cent after 5,000 km) per-kilometre rate is specifically an employee reimbursement ceiling, and it happens to work out very favourably for employees who drive an EV and get reimbursed at that rate, since their actual electricity cost per kilometre is a small fraction of the allowance. Self-employed EV owners don't get access to this flat rate at all — they're required to deduct actual expenses, including real (lower) EV electricity costs, against their business-use percentage via Form T2125, with the same detailed logbook requirement either way. Know which category you're in before assuming either the 73-cent figure or the "EV mileage math is great" advantage applies to your situation.
FAQ
Can I claim the CRA's per-kilometre rate if I'm self-employed and drive an EV? No. The flat per-kilometre allowance applies only to employer reimbursements to employees. Self-employed individuals must deduct actual vehicle expenses — including real electricity costs — multiplied by their business-use percentage, using Form T2125.
What is the CRA mileage rate for 2026? 73 cents per kilometre for the first 5,000 km driven for business purposes, 67 cents per km after that, with both figures 4 cents higher in the Yukon, Northwest Territories, and Nunavut.
Why does the CRA mileage rate favour EV drivers specifically? The rate is designed around average vehicle costs across all fuel types and hasn't been adjusted for EVs' much lower per-kilometre electricity cost (often around 2-3 cents/km), so an EV-driving employee reimbursed at the flat rate is paid well above their actual running cost. This advantage applies to reimbursed employees, not the self-employed.
What records do I need to claim vehicle expenses for an EV? A detailed logbook recording the date, destination, purpose, and distance of every business trip — required whether you're an employee tracking business use or self-employed claiming actual expenses — plus receipts for any actual costs you're deducting if self-employed.
Sources: SparkReceipt, "CRA Mileage Rate 2026: What You Need to Know"; Canada Revenue Agency, Automobile and motor vehicle allowances and Class 54 zero-emission vehicle CCA guidance. Tax rules and rates change annually and depend on individual circumstances — consult a tax professional or the CRA directly before filing.
