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.
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.
Actual cost method, apportioned by logbook
Kilometre rate method
The comparison
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 km | Business use | Actual cost | Kilometre rate | Better |
|---|
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 type | Tier one, cents per km | Tier two, cents per km |
|---|---|---|
| Petrol | 120 | 37 |
| Diesel | 130 | 38 |
| Petrol hybrid | 90 | 24 |
| Electric | 122 | 23 |
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.
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.
Related NZ calculators
- Vehicle Logbook Calculator for establishing the business use percentage
- Mileage Reimbursement Calculator for reimbursing an employee
- Deduction Value Calculator for what the claim is worth
- Annual Deductible Expenses Calculator for the rest of your claim
- Car Depreciation Calculator for the depreciation figure this uses