FAVR 90% Rule
Quick definition
The FAVR 90% rule requires an employee’s vehicle to have cost at least 90% of the program’s standard vehicle cost when new.
Full definition
The FAVR 90% rule sets a minimum original cost for an employee’s vehicle to qualify for a FAVR program. Its cost when new must be at least 90% of the standard vehicle cost used in the employee’s first year of FAVR reimbursement for that vehicle.
For example, if the standard vehicle cost used in the calculation is $40,000, the employee’s vehicle must have cost at least $36,000 when new.
The rule uses the vehicle’s original cost when new, even if the employee bought it used. It does not compare the vehicle’s current resale value with the standard vehicle cost.
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