IRD Kilometre Rates 2025–2026: Latest Inland Revenue Mileage Rates Explained
Published: July 2026 | Category: IRD Updates | Author: IRD Guru Team
IRD Kilometre Rates 2025–2026 Explained
The IRD Kilometre Rates 2025–2026 have been released by Inland Revenue for taxpayers using the kilometre rate method to claim business vehicle expenses. The updated guidance includes separate Tier 1 and Tier 2 rates for petrol, diesel, petrol hybrid and electric vehicles.
These rates can be used by eligible sole traders, self-employed individuals, partnerships and businesses to calculate deductible motor vehicle expenses instead of tracking actual running costs.
Understanding which rate applies—and when—is essential to ensuring your business vehicle claims comply with Inland Revenue requirements.
Understanding the IRD Kilometre Rates 2025–2026 for Business Vehicle Claims
Inland Revenue has published the official IRD Kilometre Rates 2025–2026 for calculating business vehicle expense claims. The rates are reviewed annually to reflect changes in fuel prices, vehicle ownership costs, maintenance and operating expenses. If you use your personal vehicle for business purposes, the kilometre rate method may provide a straightforward way to calculate deductible vehicle expenses.
Official IRD Kilometre Rates 2025–2026 for Business Vehicle Claims
The following rates apply for the 2025–2026 income year under Inland Revenue’s published guidance.
| Vehicle Type | Tier 1 Rate (First 14,000 km) | Tier 2 Rate (Business km after 14,000 km) |
|---|---|---|
| Petrol | $1.20 per km | $0.37 per km |
| Diesel | $1.30 per km | $0.38 per km |
| Petrol Hybrid | $0.90 per km | $0.24 per km |
| Electric Vehicle (EV) | $1.22 per km | $0.23 per km |
Why the IRD Kilometre Rates 2025–2026 Matter for New Zealand Taxpayers
The updated IRD Kilometre Rates 2025–2026 help taxpayers calculate vehicle expenses accurately while reducing the administrative burden of tracking every fuel, servicing and maintenance cost individually.
Using the correct kilometre rate ensures that business expense claims align with Inland Revenue guidance and can simplify tax record-keeping throughout the financial year.
Businesses That Commonly Use the IRD Kilometre Rates Method
- Sole traders
- Self-employed contractors
- Consultants
- Real estate professionals
- Tradespeople
- Property managers
- Freelancers
- Small business owners
What Changed in the 2025–2026 IRD Kilometre Rate Guidance?
Each year, Inland Revenue reviews vehicle operating costs and publishes updated kilometre rates where necessary. The 2025–2026 guidance reflects current estimates for fuel, depreciation, servicing, tyres, insurance and other vehicle ownership costs. Businesses using the kilometre rate method should ensure they apply the latest published rates when preparing tax returns or calculating deductible vehicle expenses.
Need Help Claiming Vehicle Expenses?
Not sure whether to use the kilometre rate method or actual vehicle expenses? Our team can help you understand Inland Revenue’s guidance, determine which method is right for your situation and ensure your business claims are calculated correctly.
Related IRD Guru Guides
How the IRD Kilometre Rates 2025–2026 Work
The IRD Kilometre Rates 2025–2026 use a two-tier system to calculate deductible business vehicle expenses. The applicable rate depends on your vehicle type and the total distance travelled during the income year—not just business kilometres.
This method simplifies vehicle expense claims by allowing eligible taxpayers to use Inland Revenue’s published rates instead of calculating actual operating costs for every journey. :contentReference[oaicite:0]{index=0}
Understanding Tier 1 and Tier 2 IRD Kilometre Rates 2025–2026
Tier 1 Rate
The Tier 1 rate applies to the business portion of the first 14,000 kilometres travelled by your vehicle during the income year. The 14,000 km threshold includes both business and private travel.
Tier 1 combines:
- Fuel costs
- Depreciation
- Insurance
- Vehicle registration and licensing
- Repairs and maintenance
- Tyres
- Interest and ownership costs
Tier 2 Rate
Once the vehicle exceeds 14,000 kilometres of total travel in the income year, the Tier 2 rate applies to the business kilometres above that threshold.
Unlike Tier 1, Tier 2 represents only the vehicle’s ongoing running costs because fixed ownership costs have already been accounted for in the first 14,000 kilometres. :contentReference[oaicite:1]{index=1}
Who Can Use the IRD Kilometre Rates 2025–2026?
The kilometre rate method is commonly used by individuals and businesses that use a privately owned vehicle for business purposes.
Eligible Users
- Sole traders
- Self-employed professionals
- Independent contractors
- Consultants
- Freelancers
- Property managers
- Tradespeople
- Small business owners
- Partnerships
If your vehicle is used for both business and personal travel, the kilometre rate method can be an efficient way to calculate deductible business expenses without tracking every fuel receipt or maintenance invoice. Inland Revenue also allows other methods, including the actual-cost method, depending on your circumstances. :contentReference[oaicite:2]{index=2}
How to Calculate Your Business Vehicle Claim
Using the IRD Kilometre Rates 2025–2026 is straightforward when you maintain accurate travel records.
Step 1 – Record Your Total Kilometres
Track the total distance your vehicle travels during the income year, including both business and private use.
Step 2 – Record Business Kilometres
Maintain records showing which trips relate to business activities.
Step 3 – Apply the Correct Tier
Apply the Tier 1 rate to the business portion of the first 14,000 kilometres travelled. If total travel exceeds 14,000 kilometres, apply the Tier 2 rate to the business kilometres above that threshold.
Step 4 – Keep Supporting Records
Retain logbooks and supporting documentation in case Inland Revenue requests evidence of your business travel.
Example: Calculating the IRD Kilometre Rates 2025–2026
| Example | Calculation |
|---|---|
| Total vehicle travel | 18,000 km |
| Business travel | 12,000 km |
| Vehicle type | Petrol |
| Applicable rate | Tier 1 ($1.20 per km) |
If your total vehicle travel remains below the 14,000 km threshold, all eligible business kilometres can generally be claimed using the Tier 1 rate. If total travel exceeds 14,000 km, only the business kilometres beyond that threshold are calculated using Tier 2. :contentReference[oaicite:3]{index=3}
Logbook Requirements for the IRD Kilometre Rates 2025–2026
Keeping a logbook is one of the simplest ways to support your business vehicle expense claims. A logbook should generally record:
- Date of travel
- Purpose of the trip
- Starting location
- Destination
- Odometer readings
- Total business kilometres travelled
If you do not keep a logbook, Inland Revenue may limit your claim or require additional evidence to substantiate the percentage of business use claimed. :contentReference[oaicite:4]{index=4}
Need Help Claiming Vehicle Expenses?
Unsure whether to use the kilometre rate method or the actual-cost method? Our team can help you understand Inland Revenue’s vehicle expense rules, calculate eligible deductions and ensure your claims are supported by the appropriate records.
Related IRD Guru Resources
Common Mistakes When Using the IRD Kilometre Rates 2025–2026
Although the IRD Kilometre Rates 2025–2026 provide a straightforward way to claim business vehicle expenses, many taxpayers unintentionally make mistakes that may result in incorrect deductions or questions from Inland Revenue. Understanding these common errors can help ensure your vehicle expense claims remain accurate and compliant.
Common Mistakes to Avoid
- Using outdated IRD kilometre rates instead of the latest published rates.
- Applying the Tier 1 rate to all business kilometres without considering the 14,000 km threshold.
- Not maintaining a valid mileage logbook.
- Including private travel as business travel.
- Mixing the kilometre rate method with the actual-cost method incorrectly.
- Failing to retain supporting documentation.
- Claiming expenses for ineligible vehicle use.
- Using estimated mileage without supporting records.
Keeping accurate records and reviewing the latest Inland Revenue guidance each year helps reduce the risk of errors when applying the IRD Kilometre Rates 2025–2026.
IRD Kilometre Rates 2025–2026 vs Actual Cost Method
Inland Revenue generally allows eligible taxpayers to calculate business vehicle expenses using either the kilometre rate method or the actual-cost method, depending on their circumstances. Each approach has advantages, and choosing the right method depends on factors such as vehicle usage, record keeping and business requirements.
| Kilometre Rate Method | Actual Cost Method |
|---|---|
| Uses IRD’s published kilometre rates. | Uses actual vehicle operating expenses. |
| Simpler calculations. | Requires detailed expense records. |
| Suitable for many sole traders and small businesses. | Often suitable where actual costs are significantly higher. |
| Requires accurate mileage records. | Requires receipts, invoices and financial records. |
| Less administrative work. | More detailed record keeping. |
Before choosing a method, it is worth reviewing your circumstances or seeking professional guidance to determine which approach provides the most appropriate outcome under Inland Revenue rules.
Real-World Examples of Using the IRD Kilometre Rates 2025–2026
Example 1 – Self-Employed Consultant
A consultant regularly travels to client meetings across Auckland using a privately owned petrol vehicle. By maintaining a mileage logbook and applying the IRD Kilometre Rates 2025–2026, the consultant can calculate deductible vehicle expenses without tracking every fuel purchase and servicing invoice.
Example 2 – Electric Vehicle Used for Business
A business owner uses an electric vehicle to visit customers throughout the year. Rather than calculating electricity costs, maintenance and depreciation separately, the kilometre rate method provides a simplified way to calculate eligible business travel expenses using Inland Revenue’s published EV rates.
Example 3 – Tradesperson
A plumber travels to multiple job sites every day. Keeping an accurate logbook and applying the appropriate Tier 1 and Tier 2 rates helps support deductible vehicle expenses while simplifying annual tax reporting.
Why Accurate Mileage Records Matter
Regardless of which vehicle expense method you choose, maintaining accurate records remains one of the most important Inland Revenue requirements. Well-maintained records help support your claims if Inland Revenue requests additional information and provide confidence that your deductions are based on actual business use.
Good Record Keeping Includes
- Business mileage logbooks.
- Travel dates.
- Trip purpose.
- Starting and ending odometer readings.
- Total business kilometres.
- Supporting invoices where applicable.
People Also Ask About IRD Kilometre Rates 2025–2026
What are the IRD Kilometre Rates 2025–2026?
The IRD Kilometre Rates 2025–2026 are Inland Revenue’s published rates used to calculate deductible business vehicle expenses for eligible taxpayers using the kilometre rate method.
Who can use the IRD Kilometre Rates?
The rates are commonly used by sole traders, self-employed individuals, partnerships and small businesses that use privately owned vehicles for business purposes.
What is the difference between Tier 1 and Tier 2?
Tier 1 applies to the business portion of the first 14,000 kilometres travelled during the income year. Tier 2 applies to eligible business kilometres travelled after the vehicle exceeds the 14,000 km threshold.
Do I need a mileage logbook?
Yes. Maintaining a mileage logbook helps support your business vehicle expense claims and demonstrates how business travel has been calculated.
Can I claim business vehicle expenses without receipts?
If you use the kilometre rate method, a mileage logbook is generally more important than keeping every fuel receipt. However, supporting records should still be maintained where required under Inland Revenue guidance.
IRD Guru’s Expert Insight
Every year, Inland Revenue updates its kilometre rates to reflect changes in vehicle ownership and operating costs. Using the latest IRD Kilometre Rates 2025–2026, maintaining accurate travel records and understanding when Tier 1 and Tier 2 apply can help businesses and self-employed individuals prepare more accurate tax returns while reducing compliance risks.
If you’re unsure whether the kilometre rate method or the actual-cost method is more suitable for your circumstances, seeking professional advice can help ensure your claims comply with Inland Revenue requirements.
Need Help Calculating Your Business Vehicle Expenses?
Whether you’re a sole trader, contractor or business owner, IRD Guru can help you understand the latest IRD Kilometre Rates 2025–2026, choose the right claiming method and keep your Inland Revenue records compliant.
Frequently Asked Questions About IRD Kilometre Rates 2025–2026
What are the IRD Kilometre Rates 2025–2026?
The IRD Kilometre Rates 2025–2026 are Inland Revenue’s official mileage rates that eligible taxpayers can use to calculate deductible business vehicle expenses instead of claiming actual running costs. Separate Tier 1 and Tier 2 rates apply for petrol, diesel, petrol hybrid and electric vehicles.
Who can use the IRD Kilometre Rates 2025–2026?
The kilometre rate method is commonly available to sole traders, self-employed individuals, partnerships and small business owners who use privately owned vehicles for business purposes and meet Inland Revenue’s eligibility requirements.
How does the 14,000 km threshold work?
The first 14,000 kilometres of total vehicle travel (business and private combined) use the Tier 1 rate. Once total travel exceeds 14,000 kilometres during the income year, eligible business kilometres above that threshold are generally claimed using the Tier 2 rate.
Do I need a mileage logbook?
Yes. Inland Revenue recommends maintaining an accurate mileage logbook showing business journeys, travel dates, destinations, odometer readings and the purpose of each trip. Good record keeping helps support your vehicle expense claims.
Can I use the kilometre rate method every year?
Eligibility depends on your circumstances and Inland Revenue requirements. Businesses should review the latest Inland Revenue guidance each year to determine whether the kilometre rate method or the actual-cost method is more appropriate.
Where can I find the official IRD Kilometre Rates 2025–2026?
The latest rates are published on the official Inland Revenue website and are updated when new guidance is released.
Final Thoughts on the IRD Kilometre Rates 2025–2026
The IRD Kilometre Rates 2025–2026 provide a practical and efficient way for eligible taxpayers to calculate business vehicle expenses while complying with Inland Revenue requirements.
By understanding the difference between Tier 1 and Tier 2 rates, maintaining accurate mileage records and applying the correct claiming method, businesses can simplify tax compliance and prepare more accurate tax returns.
Whether you’re a sole trader, contractor, consultant or business owner, reviewing the latest Inland Revenue guidance each year helps ensure your mileage claims remain compliant and reflect current rates.
Why Trust IRD Guru?
IRD Guru provides practical, easy-to-understand guidance on New Zealand tax matters to help individuals and businesses better understand Inland Revenue requirements. Our content is based on official Inland Revenue publications, current New Zealand tax legislation and recognised compliance practices. We regularly review and update our articles to reflect significant Inland Revenue announcements and legislative changes.
Our Editorial Standards
- Based on official Inland Revenue guidance.
- Written specifically for New Zealand taxpayers.
- Regularly reviewed for accuracy.
- Focused on practical, actionable information.
- Designed to simplify complex tax topics.
Need Help With IRD Vehicle Expense Claims?
If you’re unsure whether to use the kilometre rate method, need help calculating deductible vehicle expenses or want guidance on Inland Revenue compliance, our team is here to help. Book a complimentary consultation and receive practical guidance tailored to your situation.
Related IRD Guru Guides
Official Inland Revenue Resources
Official Inland Revenue Resources
Continue Learning with IRD Guru
About IRD Guru
IRD Guru is an independent New Zealand resource dedicated to helping individuals, sole traders and businesses understand Inland Revenue requirements. Our team publishes practical guides covering GST, PAYE, income tax, business tax compliance, myIR, vehicle expense claims, tax updates and IRD announcements. Every article is written using official Inland Revenue publications and reviewed regularly to ensure readers receive accurate, practical and up-to-date tax information.
Why Trust This IRD Kilometre Rates 2025–2026 Guide?
- Based on the latest Inland Revenue 2025–2026 kilometre rate guidance.
- Written specifically for New Zealand taxpayers and business owners.
- Reviewed using current IRD publications and tax legislation.
- Explains complex tax concepts using clear, practical language.
- Updated whenever Inland Revenue releases revised vehicle expense guidance.
- Designed to help readers make informed tax compliance decisions.
Key Takeaways
- The IRD Kilometre Rates 2025–2026 apply to eligible taxpayers claiming business vehicle expenses.
- Separate Tier 1 and Tier 2 rates apply depending on total annual vehicle travel.
- Different rates are available for petrol, diesel, hybrid and electric vehicles.
- Maintaining a mileage logbook is essential to support business travel claims.
- Review the latest Inland Revenue guidance annually before preparing your tax return.
- If you’re unsure whether to use the kilometre rate method or actual-cost method, seek professional advice.
Need Help With IRD Vehicle Expense Claims?
Understanding the latest IRD Kilometre Rates 2025–2026 can help you maximise eligible deductions while staying compliant with Inland Revenue requirements. Whether you’re a sole trader, contractor or business owner, our team can help you understand the rules, review your mileage records and answer your IRD questions.
Article Reviewed By
IRD Guru Editorial Team
This article has been prepared using the latest Inland Revenue publications and current New Zealand tax guidance. It is intended for general educational purposes and should not be considered personalised tax advice. Tax outcomes vary depending on your individual circumstances.
Last Reviewed
July 2026
This article will be updated whenever Inland Revenue publishes new kilometre rates or revises its vehicle expense guidance.
