ARTICLE · 28 JANUARY 2025

2025 Automobile Tax Deduction Limits: Key Updates For Business Owners

Bateman MacKay LLP

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If your business relies on vehicles for operations, whether through employee reimbursements, leasing, or ownership, the 2025 updates to automobile tax deduction limits could impact your tax planning.

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If your business relies on vehicles for operations, whether through employee reimbursements, leasing, or ownership, the 2025 updates to automobile tax deduction limits could impact your tax planning. Effective January 1, 2025, several key thresholds are increasing, providing greater deductions for businesses and employees using vehicles for work-related purposes. The following outlines what is changing and how you can maximize your tax savings.

Higher Tax-Exempt Mileage Allowances for Employees

Employers reimbursing employees for using their personal vehicles for business will see a two-cent increase per kilometre for tax-exempt allowances:

Provinces:
- 72 cents/km for the first 5,000 km (up from 70 cents)

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