FAVR Calculator (US)
Estimate a FAVR reimbursement for US drivers. FAVR is the IRS's fixed and variable rate programme, so it only applies to employers in the US. Choose a base vehicle, set the retention cycle and business-use percentage, pick your insurance minimums, then add an example driver with a US ZIP code to see their fixed and variable payments. Figures are in US dollars and miles. Outside the US, see car allowance + mileage further down this page.
FAVR Calculations Explained
FAVR is a US reimbursement programme set out by the IRS. Its rates are calculated based on the costs of owning and running a vehicle in the areas where employees live and work. Unlike typical cents-per-mile reimbursement using the standard IRS mileage rate, FAVR takes local cost data for each employee into account.
For companies, the process begins with selecting a standard vehicle, determining its expected retention period and establishing business-use assumptions. These factors, along with each driver's location and insurance requirements, help determine their reimbursement rates.
The fixed portion of a FAVR reimbursement covers vehicle ownership costs that don't necessarily scale with miles driven, including depreciation, insurance, registration fees and taxes. These costs are calculated using the standard vehicle and location-specific data, then converted into a recurring payment.
The variable portion covers running costs that increase with mileage, including fuel, maintenance and tyres. These expenses are calculated as a per-mile rate based on factors like local fuel prices, vehicle fuel efficiency and maintenance costs.
To calculate an employee's total FAVR reimbursement, add their fixed payment to their variable rate multiplied by the business miles they drove. For example, an employee receiving a $600 monthly fixed payment and $0.18 per mile who drives 1,200 business miles would receive $816 that month: $600 + ($0.18 × 1,200).
For a more detailed breakdown, read our guide to calculating a FAVR allowance.
More FAVR resources