IRD's kilometre rate is a business number. It tells you what you can claim for driving a vehicle for work, not what an extra few kilometres to a cheaper supermarket really costs you. Here are the latest rates, what they mean, and how they compare with what a grocery detour costs.
Rates checked 22/10/2026 on ird.govt.nz, Kilometre rates 2025-2026 (page last updated 8 Jul 2026).
The latest IRD kilometre rates
These are IRD's rates for the 2025-2026 income year, the latest it has published. IRD publishes each year's rates after that income year ends, so the rates for 2026-2027 are not out yet.
| Vehicle | Tier 1 per km | Tier 2 per km |
|---|---|---|
| Petrol | $1.20 | $0.37 |
| Diesel | $1.30 | $0.38 |
| Petrol hybrid | $0.90 | $0.24 |
| Electric | $1.22 | $0.23 |
What Tier 1 and Tier 2 mean
- Tier 1 covers both the vehicle's fixed costs and running costs. It applies to the business share of the first 14,000 km the vehicle travels in an income year, private driving included.
- Tier 2 covers running costs only. It applies to the business share of the kilometres once the vehicle's total travel, business and private, goes past 14,000 km in the year.
- IRD says the rates are for business motor vehicle expenditure claims. For the full rules, see IRD's page above and its operational statements OS 19/04A (business use of a vehicle) and OS 19/04B (reimbursing employees).
Why a grocery detour costs you less than that
Tier 1 is high because it spreads the cost of owning a car (the fixed costs) across the kilometres. Driving a few extra kilometres to a cheaper store doesn't change what you paid for the car or its insurance and registration. What it adds is running cost: mainly fuel, plus some wear. That is why this site's default is far lower than IRD's Tier 1 rate, and closer to its Tier 2 rate.
Here are the running-cost settings in our calculator next to IRD's petrol rates:
| Setting | Per km | 20 km detour (10 km each way) |
|---|---|---|
| EV (our setting) | $0.00 | $0.00 |
| Fuel only (our default) | $0.20 | $4.00 |
| IRD Tier 2, petrol | $0.37 | $7.40 |
| Fuel + wear (our setting) | $0.40 | $8.00 |
| Full running cost, incl. depreciation (our setting) | $0.83 | $16.60 |
| IRD Tier 1, petrol | $1.20 | $24.00 |
The rate you pick changes the answer. In our Huntly example the nearest PAK'nSAVE is 31 km away and its shelf prices are about $12 cheaper on the basket. At our fuel-only default the 62 km round trip costs about the same as that saving. At IRD's Tier 1 petrol rate the same round trip would come to $74.40, six times the saving.
Price your own detour
Our calculator finds your nearest PAK'nSAVE, New World and Woolworths by road, prices the same basket at each, and adds the return drive at your per-km rate, plus your time if you want it counted. Open it at either IRD petrol rate, or pick your own rate once it loads:
Use IRD Tier 1 petrol, $1.20/km Use IRD Tier 2 petrol, $0.37/km
For most shoppers the fuel-only or fuel-plus-wear setting is the honest one. Use the IRD rate if the drive is for work, or if you want to count the full cost of owning the car.
→ How we compare supermarket prices fairly
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