How much can I write off for a vehicle lease in Canada?

The CRA caps deductible lease payments. For 2026, the maximum monthly lease deduction is approximately $1,050. If your vehicle's manufacturer's suggested list price exceeds the CRA prescribed limit, the deduction is further reduced proportionally. Business-use percentage also applies.

What is CCA Class 10.1 for vehicles?

Class 10.1 applies to passenger vehicles that cost more than the CRA's prescribed limit (e.g., $39,000 for 2026). The CCA rate is 30% declining balance, but the depreciable amount is capped at the prescribed limit plus sales tax. Each Class 10.1 vehicle gets its own separate CCA class, and no terminal loss is allowed on disposition.

Can I write off a truck for my business in Canada?

Yes. If the truck qualifies as a motor vehicle (typically pickup trucks and vans designed to carry goods, especially those over 6,000 lbs GVWR), it falls under CCA Class 10 with no cost cap. You can depreciate the full purchase price at 30% declining balance. If it's classified as a passenger vehicle, the CRA's prescribed cost limit applies.

Is it better to lease or finance a business vehicle for tax purposes?

It depends on the vehicle cost, lease payments, and your tax situation. Financing generally provides larger upfront write-offs through CCA depreciation (especially with the Accelerated Investment Incentive), while leasing provides consistent annual deductions. For expensive vehicles above the CRA limit, leasing can sometimes be more advantageous since the lease formula may allow a higher effective deduction.

Vehicle Lease vs Finance Write-Off Calculator 2026

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Vehicle & Acquisition Details

📅 Tax Year: CRA limits change annually — all calculations use the selected year's rules

Vehicle Purchase Price / MSRP (before tax)

Vehicle Type

Motor vehicles (pickup trucks, cargo vans) are NOT subject to passenger vehicle cost caps. Zero-emission vehicles get enhanced first-year CCA.

Province

Business Use %

Marginal Tax Rate (combined federal + provincial)

Your combined marginal rate determines actual tax savings. Use the sole prop calculator to find yours.

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Lease Details

Monthly Lease Payment (before tax)

Lease Term (months)

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Finance Details

Down Payment

Interest Rate (%)

Loan Term (months)

CRA rules applied automatically: Passenger vehicle cost caps, lease payment limits, interest deduction caps ($300/mo), CCA declining balance with Accelerated Investment Incentive (AIIP) phase-out, and business-use proration.

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2026 CRA Vehicle Limits

Lease

Total Write-Offs (5 Years)

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Finance / Purchase

Total Write-Offs (5 Years)

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CCA Depreciation Schedule (Finance)

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Lease Deduction Schedule

Important: This calculator provides estimates based on CRA published limits. Actual deductions depend on your specific situation, including whether the vehicle is used for employment or self-employment, and other factors. Consult with a tax professional for personalized advice. Book a free consultation.

How CRA Vehicle Write-Offs Work

When you use a vehicle for business, the CRA allows you to deduct a portion of the costs — but there are strict limits depending on whether you lease or finance, and what type of vehicle you drive.

Passenger Vehicle vs Motor Vehicle

The CRA distinguishes between passenger vehicles (cars, most SUVs) and motor vehicles (pickup trucks, cargo vans designed primarily for goods/equipment). Motor vehicles are not subject to the prescribed cost caps, meaning you can depreciate the full purchase price. Most pickup trucks with a GVWR over 6,000 lbs qualify as motor vehicles.

CCA Classes for Vehicles

Class 10 — Motor vehicles and passenger vehicles under the CRA cost limit. CCA rate: 30% declining balance.
Class 10.1 — Passenger vehicles over the CRA cost limit. CCA rate: 30%, but cost is capped. Each vehicle in its own class. No terminal loss allowed.
Class 54 — Zero-emission passenger vehicles. Enhanced first-year CCA deduction (being phased out). Cost capped at the ZEV prescribed limit.

CRA Prescribed Limits — 2025–2026

Passenger CCA Cap

$38,000 (2025) / $39,000 (2026) — before tax

Lease Monthly

$1,050/mo maximum deductible lease payment (2025–2026)

Interest Monthly

$300/mo max deductible interest on passenger vehicle loans

ZEV Cap

$61,000 — zero-emission vehicle cost limit (before tax)

Lease vs Finance: Key Differences

Leasing gives consistent annual deductions but is capped at the CRA monthly limit. If the MSRP exceeds the prescribed amount, the deduction is proportionally reduced.
Financing provides larger upfront deductions through CCA depreciation (especially with AIIP), but the write-off decreases each year as the UCC declines.
Interest on financing is deductible up to $300/month for passenger vehicles. No cap for motor vehicles.

Accelerated Investment Incentive (AIIP)

The AIIP enhanced first-year CCA for new vehicle purchases. Instead of the half-year rule (15% in year 1 for Class 10), AIIP allowed up to 45% in the first year. This incentive is being phased out:

2023: Full AIIP — 1.5× first-year CCA (effectively 45%)
2024: 75% AIIP — 1.25× first-year CCA (effectively 37.5%)
2025–2026: 55% AIIP — standard rate applies (effectively 16.5%)
2027+: Standard half-year rule returns (15% first year)

Business-Use Percentage

Only the business-use portion of vehicle expenses is deductible. The CRA expects you to keep a mileage log for at least one full year to establish your business-use percentage. If audited, you'll need to demonstrate the split between personal and business kilometres.

Sources & Accuracy

CRA prescribed limits sourced from Canada Revenue Agency. For full personal and corporate Alberta tax rates or to compare sole prop vs corporation structures, use our other calculators.

CCA rates: 30% declining balance (Class 10, 10.1, 54)
AIIP phase-out schedule per Income Tax Act 1104(4)
Lease formula per CRA IT-521R (now archived; superseded by CRA guide T4002)
Provincial sales tax rates applied to CCA cost limit gross-up

Vehicle Lease vs Finance Calculator