Anyone who’s stared at a pile of business mileage receipts knows the sinking feeling when you aren’t sure you’re using the right rate. The Inland Revenue sets official kilometre rates for the 2024–2025 income year, and they vary sharply by whether you drive petrol, diesel, hybrid or electric.

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Standard mileage rate for petrol (2025 NZ): NZ$1.17 per km ·
Standard mileage rate for diesel (2025 NZ): NZ$1.26 per km ·
Standard mileage rate for hybrid (2025 NZ): NZ$0.86 per km ·
Standard mileage rate for electric (2025 NZ): NZ$1.08 per km ·
Tier 2 rate (all types) over 14,000 km: NZ$0.19–$0.37 per km ·
Effective period: Income year 2024–2025 (from 1 April 2024)

Quick snapshot

1Petrol vehicle rates
2Diesel vehicle rates
3Hybrid vehicle rates
  • Tier 1: $0.86/km (Inland Revenue – official kilometre rates page)
  • Tier 2: $0.21/km (Inland Revenue – official kilometre rates page)
4Electric vehicle rates
  • Tier 1: $1.08/km (Inland Revenue – official kilometre rates page)
  • Tier 2: $0.19/km (Inland Revenue – official kilometre rates page)
Fact Value
Current effective period Income year 2024–2025 (1 April 2024 – 31 March 2025)
Total km threshold for tier 1 14,000 km per year
Maximum tier 1 rate (diesel) $1.26/km
Minimum tier 1 rate (hybrid) $0.86/km
Source document IRD operational statement OS 19/04 (May 2025)

What is the NZ IRD mileage rate for 2025?

The rates follow a deliberate pattern: the Inland Revenue sets a higher rate for the first 14,000 business kilometres and a lower “tier 2” rate beyond that. The rates published for the 2024–2025 income year reflect the total cost of owning and running a vehicle (tier 1) or only the running costs (tier 2), according to Inland Revenue – official kilometre rates page.

What are the official IRD mileage rates per km for 2024-2025?

The table below shows the exact cents-per-kilometre across all four vehicle types.

Vehicle type Tier 1 (up to 14,000 km) Tier 2 (over 14,000 km)
Petrol $1.17/km $0.37/km
Diesel $1.26/km $0.35/km
Petrol hybrid $0.86/km $0.21/km
Electric $1.08/km $0.19/km
The pattern

Diesel attracts the highest tier 1 rate, while hybrids — which already sip fuel — get the lowest. The gap between tier 1 and tier 2 is widest for petrol: a $0.80 drop per kilometre once you cross 14,000 km.

The implication: if your business fleet logs more than 14,000 km per vehicle per year, the tail kilometres become much cheaper to claim — a strong incentive for high-mileage operators to switch to diesel or electric.

What is the mileage rate per km for 2025 in New Zealand?

“Mileage rate per km 2025” commercially refers to the same IRD rates. The per‑kilometre numbers are fixed by vehicle type, not by the vehicle itself. So a petrol van and a petrol sedan both use the same $1.17/km tier 1 rate.

What are the tier 1 and tier 2 mileage rates for each vehicle type?

  • Tier 1 (first 14,000 km): petrol $1.17/km, diesel $1.26/km, hybrid $0.86/km, electric $1.08/km (Inland Revenue – official kilometre rates page)
  • Tier 2 (over 14,000 km): petrol $0.37/km, diesel $0.35/km, hybrid $0.21/km, electric $0.19/km
The catch

Tier 2 rates are not a flat reduction — they drop more steeply for petrol ($1.17 → $0.37) than for diesel ($1.26 → $0.35). If your business drives mostly over 14,000 km per year, electric or hybrid quickly look more cost‑effective on a per‑km basis.

What this means: the vehicle type you choose for high‑mileage routes has a bigger effect on your annual claim than most business owners assume.

How to calculate mileage cost in New Zealand?

Calculating your mileage claim involves three simple steps. The formula is straightforward: total business kilometres (under 14,000 km) × tier 1 rate + kilometres over 14,000 × tier 2 rate.

What formula do I use to calculate my mileage reimbursement?

  1. Step 1: Determine total business kilometres driven in the income year.
  2. Step 2: Apply the correct tier rate – tier 1 for the first 14,000 km, tier 2 above that.
  3. Step 3: Multiply each chunk by the rate for your vehicle type and add them together.

Example: calculating mileage for a petrol vehicle

Assume you drove 18,000 business kilometres in a petrol car in 2024–2025.

  • First 14,000 km × $1.17 = $16,380
  • Remaining 4,000 km × $0.37 = $1,480
  • Total claim = $17,860

Source: IRD’s two‑tier method described on the Inland Revenue – official kilometre rates page.

Bottom line: For a small business running a petrol car 18,000 km a year, the IRD mileage rate yields a claim of $17,860. Self‑employed drivers: that amount directly reduces your taxable income. Employees: your employer may use the same rates for reimbursement, but you need an agreed arrangement.

The trade‑off: track every business kilometre carefully — IRD can ask for logs, and without them, you may have to use the lower “actual cost” method instead.

Timeline signal

Start of the 2024–2025 income year — current rates become effective
IRD publishes operational statement OS 19/04 confirming the rates for 2024–2025 (Inland Revenue – official kilometre rates page)
End of the current income year
Expected start of next income year (2025–2026); new rates likely published by IRD

Confirmed facts

  • IRD rates for 2024–2025 are as published in OS 19/04 (Inland Revenue – official kilometre rates page).
  • The two‑tier system applies based on 14,000 km threshold.

What’s unclear

  • Exact IRD mileage rates for the 2025–2026 income year have not been published at this time.
  • The methodology for annual rate adjustment (e.g., inflation index) is not detailed in the provided sources.

“The kilometre rates for the 2024–2025 income year reflect an overall increase in vehicle running costs, largely due to fuel costs.”

Inland Revenue – operational statement OS 19/04

“Tier 1 rates cover both fixed and running costs; tier 2 rates cover running costs only. That structure reflects actual cost patterns once the fixed costs of vehicle ownership have been fully recovered.”

Inland Revenue – official kilometre rates page

Why this matters

The two‑tier structure means a business that logs 20,000 km a year in a diesel van will claim $17,640 under tier 1 and only $2,100 under tier 2. That steep drop rewards accurate per‑vehicle tracking — and penalises anyone who lumps all mileage together without splitting by vehicle type.

Additional sources

mondoadvisory.co.nz, hnry.co.nz, deloitte.com, sidekickca.co.nz

For context on the previous year’s structure that led to these 2025 figures, see the IRD mileage rate for 2024 breakdown.

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Frequently asked questions

What is the difference between tier 1 and tier 2 mileage rates?

Tier 1 covers both fixed and running costs for the first 14,000 km per year; tier 2 covers only running costs after that threshold. That’s why tier 2 rates are significantly lower.

How do I know which vehicle type my car qualifies as?

IRD uses the fuel type declared on your vehicle’s registration. Petrol, diesel, petrol hybrid and electric are the four categories. Plug‑in hybrids are treated as petrol hybrid.

Can I claim mileage if I use my own car for business?

Yes — self‑employed individuals can claim the IRD kilometre rates for business travel. Employees can also claim if their employer agrees to use the IRD rates, or they can claim the difference through their tax return.

What records do I need to keep for an IRD mileage claim?

A logbook showing business vs private kilometres, date, destination and purpose. IRD recommends keeping records for at least seven years.

Do these rates apply to electric vehicles?

Yes — electric vehicles have their own tier 1 rate of $1.08/km and tier 2 of $0.19/km. The lower tier 2 rate reflects minimal running costs.

How often does the IRD update the mileage rates?

IRD typically revises rates each income year. The current rates apply from 1 April 2024 to 31 March 2025. Next update is expected around April 2025.

Can I claim mileage if I am an employee (not self-employed)?

Employees can claim mileage if they use their own vehicle for work and their employer doesn’t reimburse the full IRD rate. The difference can be claimed as a deduction in your tax return.

Bottom line: For any business owner in New Zealand claiming vehicle expenses, the 2024–2025 IRD mileage rates are the only legally safe benchmark. Diesel users: your per‑km recovery drops harder after 14,000 km than petrol users’. Hybrid and EV operators: your tier 2 rates are low enough that high‑mileage fleets should model the switch. For the self‑employed, the choice is clear: track every kilometre, split by vehicle type, and use the correct tier — or leave money on the table.