What Your Commute Really Costs

Why fuel is the wrong measure

Fuel is visible. It is bought in single, memorable amounts at a place with a large lit sign showing the price. Everything else about running a car arrives annually, irregularly, or not as a bill at all.

Take a petrol car doing 8 litres per 100 kilometres at $2.70 a litre. Over 9,200 kilometres that is 736 litres, about $1,987 of fuel. The IRD tier one rate puts the total cost of those same kilometres at $11,040. Fuel is about 18 per cent of it.

Where does the rest go? Depreciation is usually the largest single item and the least visible, because nobody writes you an invoice for it: the car is simply worth less than it was. Then servicing, tyres, a warrant, registration, insurance, and the repairs that arrive without warning. Spread across the kilometres driven, they add up to several times the fuel.

This is why judging a commute by the fuel gauge understates it by roughly three to five times, and why people are consistently surprised when they finally add it up.

The two tiers, and why they exist

The IRD rate has two tiers. Tier one applies to the first 14,000 kilometres of travel in a year and includes a share of the fixed costs of owning the vehicle. Tier two applies above 14,000 kilometres and is much lower, 37 cents rather than $1.20 for petrol, because by that point the fixed costs are treated as already recovered and only the running costs of the extra distance remain.

That structure matters for a long commute. A 34 kilometre trip each way crosses the threshold partway through the year, so the later kilometres cost less than the earlier ones. It flatters long commutes slightly, and never by enough to rescue them.

The hours, which are not money

A half-hour trip each way is an hour a day. Five days a week for 46 weeks is 230 hours a year, which is close to six working weeks. An hour each way is 460 hours, about eleven and a half working weeks, spent moving and not arriving.

There is a strong temptation to convert those hours into dollars and add them to the cost. Resist it. The moment you multiply your hours by an assumed rate and add the result to a measured cost, you have produced a total that looks precise and is mostly an assumption. Worse, the assumed rate does the heavy lifting: choose $50 an hour instead of $25 and the answer doubles without anything about your commute changing.

The honest treatment is to keep them apart. Know the cash cost. Know the hours. If it helps to price the hours, do it explicitly and keep the figure separate, which is what the calculators on this site do. The two numbers together support a decision that either one alone does not.

Time is also the reason cheap options lose

Public transport is almost always cheaper than driving and almost always slower. Cycling is cheaper still and slower than driving for most distances. The decision is rarely about which is cheapest, because that is usually obvious; it is about what the time difference is worth to you. Making the trade explicit, so many hours a year against so many dollars a year, is more useful than any single recommendation.

The question that changes every answer

Would you own the car anyway?

If the commute is the reason the car exists, then giving up the commute means giving up the car, and the full tier one rate is the right comparison. Switching to the bus saves the whole running cost.

If the car stays regardless, for weekends, for children, for a partner's work, then commuting by bus saves only the marginal cost of the trips you no longer drive. That is the tier two rate: 37 cents a kilometre rather than $1.20. On a 12 kilometre commute the difference is roughly $6,600 a year versus roughly $2,000, and a bus fare of $1,610 wins comfortably in the first case and only modestly in the second.

Almost every online comparison of driving against public transport gets this wrong, because using the full running cost makes the more virtuous option look better. It is worth being honest about which situation you are in.

When moving closer pays, and when it does not

A house further out is cheaper for a reason, and the commute is usually most of the reason. The question is whether the price difference exceeds the travel cost over the years you would actually live there. A $60,000 saving on a purchase price against $9,000 a year of extra travel is spent in under seven years, and that ignores the hours entirely.

The same arithmetic applies to a job offer. A pay rise is taxed and the travel is not deductible, so at a 33 per cent marginal rate every extra dollar of travel needs about $1.49 of extra gross salary just to stand still. That is why the break-even salary on a longer commute is so much higher than people assume, and why it is the most useful number to take into a negotiation.

Frequently Asked Questions

What does commuting cost per kilometre in New Zealand?

Inland Revenue's tier one rate for the 2025-26 income year is $1.20 a kilometre for petrol, $1.30 for diesel, $0.90 for a petrol hybrid and $1.22 for electric, covering the first 14,000 kilometres. Above that the tier two rates are 37, 38, 24 and 23 cents.

Can I claim my commute on tax?

No. Travel between home and work is private travel and is not deductible in New Zealand, whoever you work for and however far it is.

Is fuel most of what a commute costs?

No, usually well under a third. Depreciation, servicing, tyres, insurance and registration make up the rest, and a car consumes them whether it is moving or not.

How many hours a year does a commute take?

A half-hour trip each way, five days a week for 46 weeks, is 230 hours, close to six working weeks. An hour each way is 460 hours.

Does taking the bus save the whole cost of driving?

Only if you would otherwise not own the car. If the car stays anyway, you save the marginal running cost of the trips you no longer make, roughly a third as much.