# Car allowance

> A flat monthly payment covering an employee's use of a personal vehicle for business.

**URL:** https://quilometragem.com/glossary/car-allowance

**Summary:** 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.

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.