Logbook vs Kilometre Rate Calculator NZ 2026

Reviewed 5 August 2026. Kilometre rates are set by Inland Revenue each year and must be confirmed before use.

Quick answer On $9,000 of annual running costs with 60% business use from a logbook, the actual cost method claims $5,400.00. Driving 12,000 business kilometres at the kilometre rates entered gives $11,412.00. The kilometre rate is $6,012.00 better, worth $2,089.17 at a 33% marginal rate. On these figures the kilometre rate wins at every distance, so there is no crossover.
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There are two ways to claim a vehicle against business income and they almost never produce the same number, which makes the choice worth a few minutes rather than a guess. The actual cost method adds up everything the vehicle genuinely costs across a year, fuel, servicing, tyres, registration, insurance, repairs and depreciation, then claims the business share of that total based on a logbook. It rewards expensive vehicles with high fixed costs, because insurance and depreciation are claimed in proportion to business use whether you drive one kilometre or fifty thousand. The kilometre rate method ignores what your vehicle actually costs and pays a set amount per business kilometre, at a higher tier one rate for an initial band and a lower tier two rate beyond it. It rewards cheap, efficient vehicles driven a long way. Between those two shapes there is always a crossover distance where the methods agree, and knowing whether you sit above or below it settles the question. This calculator runs both on your own figures, shows the gap in claim and in tax, and reports the crossover so you can see how close the decision is.

Better method
Kilometre rate
by $6,012.00 of claim
Worth in tax
$2,089.17
at your marginal rate
Methods agree at
no crossover
of business travel

Actual cost method, apportioned by logbook

Running costs$7,000.00
Depreciation or lease$2,000.00
Total vehicle cost$9,000.00
Business use from logbook60.00%
Actual cost claim$5,400.00
Cost per kilometre driven45.0c

Kilometre rate method

Business kilometres12,000
At tier one rate8,400 km
Tier one claim$10,080.00
At tier two rate3,600 km
Tier two claim$1,332.00
Kilometre rate claim$11,412.00
Average rate per business km95.1c

The comparison

Actual cost method$5,400.00
Kilometre rate method$11,412.00
Difference in claim$6,012.00
Difference in tax at 33%$2,089.17
Business kilometres where they agreeno crossover

How the answer changes with distance

Same vehicle and same total costs, varying only the business kilometres. The business use percentage moves with the distance, which is why both columns change.

Business kmBusiness useActual costKilometre rateBetter

Inland Revenue kilometre rates, 2025 to 2026 income year

The defaults above use the petrol rates. Change the rate fields if your vehicle is a different type. Rates are published each year, so check the source before relying on them.

Vehicle typeTier one, cents per kmTier two, cents per km
Petrol12037
Diesel13038
Petrol hybrid9024
Electric12223

Source: the Income Tax (Kilometre Rates for the Business Use of Vehicles for the 2025-26 income year) Instrument 2026, made under section DE 12(4) of the Income Tax Act 2007 and in force from 4 June 2026. Published at Inland Revenue, Kilometre rates 2025 to 2026 and in OS 19/04 KM 2026. Read 5 August 2026.

Note on reimbursing an employee. These rates are set retrospectively for the income year just ended, so they may not reflect what an employee is actually spending now. Inland Revenue has said it is considering further guidance for reimbursement in the 2027 income year because of fuel price increases. Where an employer does not know which vehicle type an employee drives, Inland Revenue accepts a blended average of the four tier one rates as a reasonable estimate.

This is an estimate, not tax advice. The 14,000 kilometre band is measured against total vehicle travel, private use included, and the tier one rate applies to the business portion of that first 14,000 kilometres. Rates are published each income year and change. The choice of method is generally fixed for as long as you hold the vehicle. Confirm your position with Inland Revenue or your accountant.

Which shape is your vehicle

The two methods reward opposite things. Actual cost rewards a vehicle that is expensive to own, since insurance, registration and depreciation are claimed at your business use percentage regardless of how far you drive. The kilometre rate rewards a vehicle that is cheap to run and used heavily for business, since the payment is per kilometre and takes no account of what the vehicle actually costs. A late model vehicle with high depreciation and modest business mileage usually favours actual cost. An older, paid off, efficient vehicle covering long business distances usually favours the kilometre rate, sometimes by a wide margin.

Why the tier two rate matters more than it looks

The tier one rate covers both fixed and running costs, which is why it only applies to an initial band of kilometres. Once you pass that band the fixed costs are treated as recovered and the much lower tier two rate applies. The effect is that the average rate per business kilometre falls steadily as distance rises, so a business doing very high mileage does not simply multiply its kilometres by the headline rate. Anyone close to or beyond the tier one band should run both methods rather than assuming the kilometre rate keeps winning.

Worked example

A vehicle costs $7,000 a year to run with $2,000 of depreciation, a total of $9,000. It travels 20,000 kilometres of which 12,000 are for business, a business use of 60.00%. The actual cost method therefore claims $5,400.00.

Under the kilometre rate method, all 12,000 business kilometres fall within the tier one band, so the claim is $11,412.00. That is far larger, and the reason is visible in the cost per kilometre: this vehicle costs 45.0c a kilometre to run while the tier one rate pays 120c for the first band. The kilometre rate is designed to cover fixed costs as well, so it exceeds the running cost of an inexpensive vehicle by a wide margin.

How this is calculated

The actual cost claim is total vehicle cost multiplied by business kilometres divided by total kilometres. The kilometre rate claim applies the tier one rate to business kilometres up to the tier one band and the tier two rate to anything beyond it. The difference between the two claims is converted to tax at the marginal rate you select. The crossover is the business kilometre count at which both methods produce the same claim, found by solving the two expressions against each other; because the business use percentage itself moves with business kilometres, both sides of that equation change together, which is why the crossover is not simply total cost divided by the rate.

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Frequently asked questions

What are the two ways to claim vehicle expenses in New Zealand?

The actual cost method claims a share of what the vehicle genuinely costs you, including fuel, servicing, tyres, registration, insurance, repairs and depreciation, apportioned by the business use percentage from a logbook. The kilometre rate method claims a set amount per business kilometre using rates Inland Revenue publishes each year, with a higher tier one rate for an initial band of kilometres and a lower tier two rate beyond it. You choose one method per vehicle, and the choice generally applies for as long as you own it.

Which method gives the bigger claim?

It depends on how expensive the vehicle is to run and how far you drive for business. The actual cost method tends to win for expensive vehicles with high fixed costs and a high business use percentage, because depreciation and insurance are claimed in proportion regardless of distance. The kilometre rate tends to win for cheap, efficient vehicles driven a long way, because the rate is paid per kilometre whatever the vehicle actually costs. Running both, which is what this calculator does, is the only reliable way to know.

Do I still need a logbook if I use the kilometre rate?

Yes. You need evidence of the business kilometres you are claiming whichever method you use. A logbook covering a representative period of at least 90 consecutive days establishes a business use percentage that can then be applied for up to three years, provided your usage pattern does not change materially. Without records, neither method is defensible if your return is reviewed.

Why are there two tiers in the kilometre rate?

The tier one rate covers both the fixed costs of owning a vehicle and the running costs, so it applies only to an initial band of kilometres each year. Beyond that band the fixed costs are treated as already recovered, and the lower tier two rate covers running costs alone. This is why the average rate per kilometre falls as business distance rises, and why very high mileage makes the actual cost method more competitive than the headline tier one rate suggests.

Can I switch methods later?

The choice is generally made when you start claiming for a vehicle and applies while you hold it, so it is worth getting right at the outset rather than assuming it can be revisited. If your circumstances change substantially, or you replace the vehicle, the position should be reconsidered. Confirm the rules that apply to your situation with Inland Revenue or your accountant before switching.