IRD Kilometre Rate Calculator NZ 2026/27

Quick answer: For a petrol or diesel vehicle, IRD's kilometre rate is $1.20 per km for the business share of the first 14,000 km your vehicle travels in the year (business and private combined), then 37 cents per km for the business share of anything beyond that. Enter your total kilometres and your business-use percentage below for your own claim.

This IRD kilometre rate calculator works out a business vehicle mileage claim or reimbursement in New Zealand, using the two-tier rate structure Inland Revenue publishes each year as an alternative to tracking every fuel, servicing and depreciation receipt. Enter the total kilometres your vehicle travelled during the year, combining both business and private trips, and your business-use percentage based on a logbook or a reasonable record of your driving. The calculator applies the higher Tier One rate to the business portion of the first 14,000 km of that total travel, and the lower Tier Two rate to the business portion of anything beyond 14,000 km, since Tier One already accounts for the fixed costs of owning the vehicle such as depreciation, insurance and registration, while Tier Two covers running costs only. It then totals the two tiers into a single dollar claim. This is useful for self-employed people and sole traders claiming a deduction for business use of their own vehicle, for employers working out a tax-free reimbursement for staff using their own vehicle for work, and for close companies considering the kilometre rate method for a vehicle also used privately by a shareholder-employee. It updates instantly as you type, with no need to press a button. Figures are rounded for display and are an estimate for planning; keep a logbook to support your actual business-use percentage and check current IRD guidance before filing.

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Updated  Current rates and legislation applied.
Verification & Methodology
Rate used: Standard petrol/diesel Tier One rate of $1.20 per km (first 14,000 km of total vehicle travel in the year) and Tier Two rate of 37 cents per km (business travel beyond 14,000 km). These are IRD's most recently published kilometre rates, for the 2025-2026 income year.
Vehicle type note: IRD publishes slightly different Tier One and Tier Two rates for diesel, petrol hybrid and electric vehicles. This calculator uses the standard petrol/diesel figure; see the full IRD kilometre rates reference table for the exact rate by vehicle type.
Publication timing: IRD sets kilometre rates after each income year ends, so the 2025-2026 rates are the current published figures. No rate has yet been published for the 2026-2027 year at the time of writing; check IRD directly before relying on this for a future return.
Source data: Inland Revenue: kilometre rates 2025-2026. Last verified 1 July 2026.
km
%
$9,510.00
total kilometre-rate claim or reimbursement
Business km (total)10,000
Tier 1 km7,000
Tier 1 amount$8,400.00
Tier 2 km3,000
Tier 2 amount$1,110.00

Tier One ($1.20/km) applies to the business share of the first 14,000 km of total vehicle travel; Tier Two (37c/km) applies to the business share of travel beyond that. Figures are rounded for display and are an estimate for planning, based on the standard petrol/diesel rate.

What to do next: Keep a logbook covering at least 90 consecutive days to support the business-use percentage you have entered, since that record is what backs up your claim if Inland Revenue ever asks. If you would rather this figure was worked out and applied for you automatically alongside the rest of your tax, contractor accounting services such as Hnry can factor vehicle deductions like this into your ongoing tax calculations and IR3 return.

Worked example

Grace is a self-employed mobile dog groomer who drives her van 20,000 km over the year, split roughly evenly between client visits and personal use, so she records a 50% business-use percentage from her logbook.

Her total travel of 20,000 km sits above the 14,000 km Tier One threshold, so it is split into two bands. The first 14,000 km of total travel is claimed at Tier One, and the remaining 6,000 km of total travel is claimed at Tier Two. Applying her 50% business-use percentage to each band: 14,000 km × 50% = 7,000 business km at Tier One, and 6,000 km × 50% = 3,000 business km at Tier Two.

At the Tier One rate of $1.20 per km, her 7,000 business km are worth $8,400.00. At the Tier Two rate of 37 cents per km, her 3,000 business km are worth $1,110.00. Adding the two together gives Grace a total kilometre-rate claim of $9,510.00 for the year, across 10,000 business kilometres in total.

Why the 14,000 km cap applies to total travel, not just business travel

A common misunderstanding is that the 14,000 km Tier One threshold applies only to business kilometres. It does not. The threshold applies to the vehicle's total travel for the year, business and private combined, because Tier One is designed to cover the fixed costs of owning the vehicle, such as depreciation, insurance and registration, which apply whether a trip is for business or not. Once the vehicle's total travel for the year passes 14,000 km, the business portion of every kilometre after that is claimed at the lower Tier Two rate instead, which covers running costs only. This is why this calculator asks for total kilometres travelled first, then applies your business-use percentage to work out how many of those kilometres in each band were actually business use.

The two tiers explained

Tier One blends fixed vehicle costs with running costs into a single higher rate, on the basis that most vehicles will not travel more than 14,000 km in a year, so the fixed costs are effectively spread across all of that travel. Tier Two strips the fixed-cost component out and covers running costs only, such as fuel, tyres and servicing, because those fixed costs have already been accounted for within the first 14,000 km. If your total travel for the year is under 14,000 km, every business kilometre you claim is at the higher Tier One rate.

Kilometre rate versus claiming actual costs

The kilometre rate method is an alternative to keeping every receipt for fuel, servicing, insurance, registration, depreciation and repairs, and then apportioning the total by your business-use percentage. It suits people with moderate business use or a lower-value vehicle, since it is far less record-keeping. If you drive a high-value vehicle with heavy business use, working out your actual costs and depreciation can sometimes produce a larger deduction, but it requires complete records for every cost across the year and is more work to maintain. Compare the two using the Vehicle Running Cost Calculator before deciding which method suits your situation.

Logbooks and record-keeping

Whichever method you use, you need evidence of your business-use percentage. Inland Revenue accepts a representative logbook kept for at least 90 consecutive days, covering a typical period of your driving, which can then be applied for up to three years provided your pattern of use has not changed materially. Keep the logbook itself, along with your total odometer readings at the start and end of the year, since both feed directly into this calculator.

Who this calculator is for

This calculator is for self-employed people and sole traders claiming a deduction for using their own vehicle for business, employers reimbursing employees tax-free for using their own vehicle for work, and close companies weighing up the kilometre rate method against Fringe Benefit Tax for a vehicle also used privately by a shareholder-employee. It assumes a standard petrol or diesel vehicle and a single business-use percentage applied consistently across the year. Figures are rounded for display and are indicative only; keep your logbook and odometer records, and rely on current IRD guidance when filing your actual return.

Related calculators

Official NZ sources

This calculator is built from primary New Zealand sources. Always confirm current figures against the official source for your situation:

Frequently asked questions

What are the current IRD kilometre rates?

For a standard petrol or diesel vehicle, the Tier One rate is $1.20 per kilometre and the Tier Two rate is 37 cents per kilometre. These are the most recently published IRD kilometre rates, for the 2025-2026 income year. IRD sets kilometre rates after each income year ends, so these remain the best current figures to use until new rates are published for the 2026-2027 year.

How does the 14,000 km Tier One threshold actually work?

The 14,000 km threshold applies to the vehicle's total travel for the year, business and private combined, not just business kilometres. The Tier One rate covers the business portion of the first 14,000 km of total travel. Once total travel passes 14,000 km, the business portion of every kilometre after that is claimed at the lower Tier Two rate instead.

Why is the Tier One rate higher than Tier Two?

Tier One blends the vehicle's fixed costs, such as depreciation, insurance and registration, with its running costs, such as fuel, servicing and tyres. Tier Two covers running costs only, on the basis that the fixed costs of owning the vehicle are already accounted for within the first 14,000 km of the year.

Do I need a logbook to use the kilometre rate method?

Yes. You need a logbook or another reasonable record of your business travel to support your business-use percentage. Inland Revenue accepts a representative logbook kept for at least 90 consecutive days, which can then be applied to work out your business-use percentage for up to three years, provided your pattern of use has not changed significantly.

Is the kilometre rate method better than claiming actual vehicle costs?

It depends on your travel and your vehicle. The kilometre rate is simpler, since it avoids keeping every fuel, repair and insurance receipt, and it can suit lower-cost vehicles or lower business use well. If you drive a high-value vehicle with heavy business use, working out your actual costs and depreciation may give a larger deduction, though it requires full records and is more work to maintain.

Can I use different rates for diesel, hybrid or electric vehicles?

Yes. IRD publishes separate Tier One and Tier Two rates for petrol, diesel, petrol hybrid and electric vehicles, and diesel and hybrid rates differ slightly from the standard petrol figure used in this calculator. See our full IRD Mileage and Kilometre Rates reference table for the exact rate by vehicle type.

Can employers use the kilometre rate to reimburse staff?

Yes. Employers can reimburse employees tax-free for using their own vehicle for work, using the same IRD kilometre rates and the same 14,000 km Tier One threshold, based on the total travel of the employee's vehicle for the year.

Can a company use the kilometre rate instead of paying Fringe Benefit Tax?

A close company with one or two vehicles that are also used privately by a shareholder-employee may in some circumstances choose to apply the kilometre rate method to that private use instead of accounting for Fringe Benefit Tax. The rules are specific to close companies and the choice generally has to be applied consistently once made, so check the current IRD guidance or your accountant before switching methods.