Please be aware that this site is informational only, and many external factors, unique to your company might apply.
Each company must make their own decisions about how they meet their tax obligations.
A mileage allowance is a payment employees receive for using their personal vehicle for work-related travel, such as visiting clients. It doesn’t apply to commuting between home and the regular workplace.
Mileage allowances are tax-free, as long as they don’t exceed the statutory rates for 2024-2025, effective from 1 April 2025:
| Vehicle Type | Tier 1 rate per km | Tier 2 rate per km |
|---|---|---|
| Petrol | NZD 1.17 | NZD 0.37 |
| Diesel | NZD 1.26 | NZD 0.35 |
| Petrol Hybrid | NZD 0.86 | NZD 0.21 |
| Electric | NZD 1.08 | NZD 0.19 |
- Tier 1: Covers both fixed and running costs. Use for the business portion of the first 14,000 kilometres travelled in an income year (including private travel).
- Tier 2: Covers running costs only. Use for business travel beyond 14,000 kilometres in an income year.
If an employer pays a mileage allowance above the maximum rate, the excess is treated as taxable income.
Alternatively, companies may reimburse actual vehicle costs, supported by accurate records (e.g. fuel purchases).
Last changed 2026-01-26