Standard Vehicle

In a fixed and variable rate (FAVR) program, the employer selects a vehicle to represent what employees need for their work. Its estimated ownership and operating costs, such as depreciation, insurance, fuel, and maintenance, help determine reimbursement payments using local cost data.

For example, a business might select a midsize sedan for sales reps and a pickup truck for field technicians. Each vehicle's estimated costs serve as the basis for that group's reimbursements.

Employees don't have to drive that exact make and model, but their vehicles must meet the program's requirements and applicable IRS rules.