Car Depreciation Calculator Canada
Estimate your vehicle's resale value year by year. Covers gas, hybrid, EV, and luxury — and adds the federal luxury tax above $100,000.
Your Vehicle
How Car Depreciation Works in Canada
A new vehicle loses 19–28% of its value in the first year and roughly half its value within 3–5 years. Depreciation is the single biggest cost of owning a car — typically larger than fuel, insurance, and maintenance combined. Understanding it helps you make a smarter purchase decision.
Depreciation is a function of three things: reliability reputation (Toyota, Honda, and Mazda hold value best; European luxury and some American brands depreciate faster), body style (trucks and SUVs have stronger resale than sedans in Canada), and powertrain (EVs currently depreciate faster than gas as battery technology and rebate programs evolve).
Canada also has a federal luxury tax on vehicles priced over $100,000 (effective September 1, 2022). It's 10% on the value above the threshold, applied to the total MSRP including options and freight. This tax is in addition to the 5% GST (or 13–15% HST in participating provinces). Some provinces have their own additional taxes for very high-end vehicles.
For business use, the Canada Revenue Agency lets you claim Capital Cost Allowance (CCA) Class 10.1, which caps the depreciable amount of a passenger vehicle. Class 10.1 was introduced to limit tax-shelter use through expensive luxury cars and is the default for most passenger vehicles used for business.
Frequently Asked Questions
How much does a car depreciate each year in Canada?
A typical new car in Canada depreciates about 19–22% in year 1, then 10–15% per year after that. A $30,000 sedan is usually worth $20,000–$24,000 after one year, $16,000–$18,000 after two, and $11,000–$13,000 after five. Trucks and SUVs hold value better (15–18% per year), while EVs and luxury vehicles depreciate faster (22–28% per year for the first 3 years).
What is Canada's federal luxury tax on vehicles?
Canada's Luxury Tax (effective September 2022) is a 10% tax on the value of a new vehicle above $100,000. A car with an MSRP of $120,000 pays $2,000 in luxury tax; a $200,000 car pays $10,000. The tax applies to the total price including options, freight, and accessories, but is not applied to the trade-in value of a vehicle. The $100,000 threshold is not indexed to inflation.
Do EVs depreciate faster than gas cars?
Yes, currently EVs depreciate about 15–20% faster than comparable gas cars in Canada. The reasons: rapid battery technology improvements (older models feel dated faster), changing government rebates ($5,000–$10,000 iZEV was cut in January 2025), and uncertainty about long-term battery replacement costs. The average 3-year-old EV retains ~48% of its value vs ~58% for a gas sedan. This gap is expected to narrow as the EV market matures.
What factors affect car depreciation the most?
The biggest depreciation factors, in order, are: 1) brand reliability reputation (Toyota/Honda hold value best), 2) body style (trucks and SUVs hold value better than sedans), 3) powertrain (EVs and luxury brands depreciate fastest), 4) mileage (every 10,000 km/year over 15,000 reduces value ~3–5%), 5) colour and options (white/black/grey hold value; unusual colours hurt), 6) accident history, and 7) service records.
Should I buy a new or used car to minimize depreciation?
Buy a 2–3 year old used car to avoid the steepest depreciation. A car loses 30–45% of its value in the first 2 years. Buying a 2-year-old vehicle that's been off-lease lets someone else absorb that hit. Lease returns are typically well-maintained, have remaining warranty, and cost 30–40% less than buying new. This is the single best financial strategy for most car buyers.
Is depreciation tax-deductible in Canada?
For personal use, no — personal car depreciation is not tax-deductible in Canada. For business use, yes — if you use the vehicle for self-employed business or to earn income, you can claim Capital Cost Allowance (CCA) Class 10 or 10.1. Class 10.1 applies to passenger vehicles and caps the depreciable amount (~$36,000 + taxes/fees for 2024). Talk to an accountant for your specific situation.
What mileage is best for resale value?
The sweet spot for resale is 12,000–15,000 km per year. A vehicle with 60,000 km after 5 years is more valuable than the same vehicle with 100,000 km. At 20,000+ km/year (commuter territory), expect 5–10% lower resale. Most Canadian buyers expect to see ~15,000 km/year as 'normal'.