On January 28, 2026, the Quebec government confirmed that they are harmonizing the Automobile Deduction limits for 2026 with the Federal Government.
As of January 1, 2026, the general prescribed rate used to determine the taxable benefit for employees relating to the personal portion of automobile expenses paid by their employers will remain at 34 cent per kilometre. For people employed principally in selling or leasing automobiles, the rate used to determine the employee’s taxable benefit will remain at 31 cent per kilometre. The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes in all jurisdictions increased from 72 to 73 cent per kilometre for the first 5,000 kilometres driven and from 66 to 67 cent for each additional kilometre.
For the territories, the deductible limit for tax-exempt allowances paid by employers to employees is increased to 77 cent for the first 5,000 kilometres travelled and 71 cent for additional kilometres.
Employers should:
- Review and update their payroll systems to ensure the taxable automobile benefits and mileage allowances reflect the 2026 prescribed rates;
- Adjust reimbursement policies for employees using personal vehicles for business to align with the increased per-kilometre limits;
- Analyze impact to organization’s budget and advise accordingly; and
- Communicate the changes clearly to employees.