2025 Automobile Deductions in Canada

The Minister of Finance updates various limits on how vehicle expenses can be deducted each year. This is announced every year, although the limits do not always change every year. For 2025, the amount you can reimburse an employee for use of their personal car is 72 cents per km for the first 5000 km. After that the amount is 66 cents.
If your business is incorporated and you use your personal vehicle for business travel, then you use these rates to reimburse yourself. This is what I do. I find it far easier to be reimbursed by one of my companies, than it is to keep all the gas receipts, etc. for the whole year and figure out how much I can deduct on my personal tax return. I have joked that being able to reimburse myself by kilometer is a good reason to incorporate a business. There are other limits.
A passenger vehicle which is used for business can be depreciated for tax purposes up to the new limit of $37,000 unless this passenger vehicle is a zero emission vehicle, in which case the limit is $61,000. What this means is that if you purchase a vehicle that costs more than $37,000, the amount over the $37,000 will never be a deduction and you will not be able to get the HST back on the excess amount either.
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