Reimbursement & Payment
A flat monthly payment covering an employee's use of a personal vehicle for business.
A car allowance is the flat monthly payment covering an employee's personal-vehicle costs for work — gas, maintenance, depreciation, insurance. Simple to run, but typically non-accountable and therefore taxable as wages. FAVR is the more sophisticated accountable alternative. Employers seeking tax-free status pair the allowance with per-trip substantiation.