Variable Payment
Quick definition
A variable payment is the part of a FAVR reimbursement calculated by multiplying business miles by a rate for vehicle operating costs.
Full definition
In a FAVR program, the variable payment reimburses an employee for operating costs based on how many business miles they drive. The employer multiplies those miles by a per-mile rate based on local costs for the standard vehicle.
Operating costs include fuel, oil, tires, and routine maintenance.
For example, 1,000 business miles at a variable rate of 20 cents per mile would produce a $200 payment.
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