Fuel Tax Deductions You Can Claim

The simplest way to claim car expenses is the cents per kilometre method. For 2025-26, the ATO rate is 88 cents per kilometre, up from 85c last year.

You can claim up to 5,000 business kilometres per year — that's a maximum deduction of $4,400. You don't need receipts, a logbook, or fuel records. You just need to be able to show how you calculated the kilometres (a reasonable estimate is fine).

The 88c rate covers everything — fuel, rego, insurance, depreciation, servicing, tyres. You can't claim any of those separately on top.

This method works best if you do moderate work-related driving and don't want the hassle of keeping records. For most people doing under 5,000 business km, it's the go-to.

If you drive more than 5,000km for work, the logbook method will usually give you a bigger deduction. But it requires actual records.

Here's how it works:

1. Keep a logbook for 12 consecutive weeks. Record every trip — date, start/end odometer readings, kilometres driven, and whether it was business or personal.
2. Calculate your business-use percentage. If 60% of your driving is for work, you claim 60% of all car costs.
3. Keep receipts for everything. Fuel, rego, insurance, servicing, tyres, car wash, depreciation — all claimable at your business percentage.

The logbook is valid for 5 years, provided your work-travel pattern doesn't change significantly. With fuel at $2.50/L, the deduction for a heavy driver can easily hit $8,000-12,000.

At current fuel prices, someone spending $80/week on fuel with 65% business use would claim about $2,700 in fuel alone — before adding rego, insurance, and depreciation.

This is where people get caught out. The rules are clear but counterintuitive:

You CAN'T claim:

• Driving from home to your regular workplace (your daily commute)
• Driving home from work
• Personal errands during the day, even if you're "on the clock"

You CAN claim:

• Driving between two separate workplaces
• Driving from your workplace to a client's premises
• Driving to an alternative workplace (e.g., a different branch)
• Driving from home to work if you carry bulky tools that can't be stored at work
• Driving to attend work-related training or conferences

The bulky tools exception is a big one for tradies, nurses carrying medical equipment, and musicians carrying instruments. If your tools weigh more than you can comfortably carry and there's nowhere to store them at work, your commute becomes deductible.

If you're working from home to avoid fuel costs, you can claim the 67 cents per hour fixed rate for every hour you work from home. This covers electricity, internet, phone, and the decline in value of furniture.

On a typical 8-hour WFH day, that's $5.36/day or $26.80 for a 5-day WFH week. Over the financial year, a full-time WFH worker can claim around $1,393.

You need to keep a record of your hours — a timesheet, roster, or diary entry is fine. You also need a dedicated work area (the kitchen table counts, but you can only claim for hours actually worked).

If your actual costs are higher (e.g., you have a dedicated home office), the actual cost method lets you claim the real running costs of your workspace, but you need receipts for everything.

Cents per km method: No fuel receipts needed. No receipts at all, actually. Just a reasonable estimate of your business kilometres.

Logbook method: Yes, you need receipts for all car expenses including fuel. But here's a hack — if you always fill up at the same servo and pay by card, your bank statement is sufficient as a record. The ATO accepts digital records.

For any total claim over $300 (across all work deductions, not just car), you need written evidence. Given that 5,000km at 88c already hits $4,400, most people claiming car expenses will need records for their other deductions too.

Use our tax calculator to see how fuel deductions affect your refund.