What Rate is the Right Rate For IRS Compliant Vehicle Reimbursement?


AMHERST, N.Y., Dec. 1, 2017 -- The IRS has revenue procedures governing what is to be paid for vehicle reimbursement; the big benefit to IRS compliant vehicle reimbursement is the non-taxable payments.  There are two structures that permit non-taxable payments, the FAVR and the IRS Standard Mileage Rate.  CarData reviews how these structures operate and why there are two methods.

FAVR -  Fixed & Variable Reimbursement
A fixed and variable method reimburses for the cost of putting the car in the driveway (fixed expenses), and for driving the car on business (variable expenses).  Here are the expenses that are covered:

When is the fixed & variable method used?

What determines the fixed & variable rate?

IRS Standard Mileage Rate
What is the standard mileage rate method?

When is the standard mileage rate used?

What are features of the standard mileage rate?

Using FAVR and the Mileage Rate in Practice
Both methods serve their purposes and suit their applications very well.
Fixed and variable is regarded as "best-in-class" because of the regional accuracy and the fairness to low mileage and high mileage drivers.
The standard mileage rate is regarded as higher than actual expenses but fair when used on an occasional basis.

About CarData Consultants: CarData provides precision vehicle reimbursement programs for the modern, mobile workforce. CarData services save money, reduce risk, and make it easier for drivers. CarData programs are compliant with the IRS and the CRA.

CarData conducts its own primary research on vehicle insurance premiums, and uses publicly available sources including state departments of insurance, and vehicle insurance websites.