Your car allowance is taxed. Your drivers aren't getting what you're paying for.
FAVR — Fixed and Variable Rate reimbursement — puts the same (or more) money in your drivers' pockets, tax-free. And it typically costs you less to run than a flat allowance.
Get a personalized FAVR program offer tailored to your organization's needs
Book a Free Consultation
How our FAVR program works
- 1
We design your program
We build a customized FAVR plan around your business: driver roles, locations, company goals, and budget. You get a program built for your workforce today, ready to adapt as your business changes.
- 2
Drivers track mileage automatically
Your team uses Driversnote to automatically log business miles in the background on their phones. No spreadsheets. No manual entry. Maximum convenience.
- 3
We calculate and pay
Each month, we calculate every driver's reimbursement using real local cost data — fuel prices, insurance rates, and depreciation in their area. Payments go straight to drivers, separate from payroll, on your schedule.
The problem with a flat car allowance
Every dollar of car allowance you pay runs through payroll. That means your drivers lose 20–40% to income tax before they see a cent — and you pay Federal Insurance Contributions Act (FICA) on top of it.
Your drivers aren't getting what you're spending. The difference is tax waste.
Raise the allowance to compensate, and you're handing more money to the IRS. Switch to a mileage rate, and your low-mileage drivers end up worse off.
Neither option reflects the actual cost of owning and driving a car for work. With FAVR, you solve the tax waste problem.
The solution
FAVR solves the tax waste problem
FAVR separates vehicle costs into two categories, and reimburses each one correctly:
- Fixed costs of owning a car: insurance, depreciation, registration
- Variable costs of driving it: fuel, maintenance, tires
Fixed costs are covered by a monthly payment. Variable costs are reimbursed per mile, tied to actual fuel prices in each driver's work location.
The result
Reimburse real driving costs tax-free
With FAVR, the reimbursement reflects the costs your drivers actually incur, personalized to where they live and how much they drive.
Because IRS-compliant FAVR reimbursements are completely tax-free, your drivers keep 100% of their money and your company avoids payroll and FICA taxes.
How FAVR compares
| Flat car allowance | Cents per mile (IRS rate) | FAVR | |
|---|---|---|---|
| Tax-free | Taxable | ||
| Reflects fixed costs (designed to cover actual driver costs) | Partially | ||
| Adjusts for local costs | |||
| Fair across high- and low-mileage drivers | |||
| Cost-controlled for employer | Partially | Partially |
What advantages you gain by switching
Less tax waste, more take-home for drivers
A taxable $600 allowance is worth around $400 after tax. The same money paid as a FAVR reimbursement is worth $600. Put it in your drivers' pockets — without touching your budget.
Costs that match actual driving
Drivers in California have higher insurance and fuel costs than drivers in rural Ohio. A flat allowance pays them the same. FAVR adjusts automatically, so you're never overpaying in low-cost areas or underpaying where expenses are high.
IRS compliance you can stand behind
FAVR is an IRS-compliant plan. Our programs are built to the letter of IRS Revenue Procedure 2019-46 — accurate, defensible, and audit-ready. Decades of FAVR experience, on your side.
Risk mitigation
Driversnote validates that your employees carry a valid driver's license and automotive insurance 365 days a year, keeping you out of the crosshairs of liability.
Flexible reimbursement payments
Driversnote pays your drivers via direct deposit monthly or bi-weekly. No administrative overhead to deal with.
Trusted by managers. Preferred by drivers.
Driversnote app is used for mileage tracking for a business and for the IRS. The electronic trackers in our cars as well as the apps both work well on both iOS and Android. The staff at Driversnote has been great to work with when any questions arose. I recommend this company and their products.
“Quick setup, easy reporting, and affordable automatic mileage tracking” Quick and easy to set up, and straightforward for employees to use. Reporting is simple and easy to work with, and it's very affordable.
“Great mileage tracker” This has been a great mileage tracker for me and my co-workers. Easy to track mileage and make any adjustments needed. Will track automatically and can be turned off if desired. Also easy to make PDFs to submit for reimbursement.
“Excellent app” Got it because it was recommended by the IRS. It has an excellent user interface and I recommend it to others.
“Very reliable” Five star app very good for tracking miles and very dependable.
“Great customer service” Russ was quick and responsive and solved all issues.
I had a great experience with Driversnote. They are responsive to any of your needs and very helpful. The app itself is easy to use.
“Game changer” The time it saves me — love love love.
“Best mileage tracking app I've ever used” I experimented with multiple apps before deciding on Driversnote, but this one is the most organized and easy-to-use tracking app on the market. Simple but detailed and functional interface. I am using the iBeacon, a device that makes it less battery-costly and provides more accurate tracking — provided complimentary if you buy a pro plan. Mine was stolen from my car the other day and they offered a free replacement. Overall, I'm very satisfied with the app.
Two things that set Driversnote's FAVR program apart from the rest
We've spent 14 years building mileage tracking technology, and it's backed by a team with 28 years of FAVR and reimbursement experience.
Those two things reinforce each other: accurate mileage data is what makes a FAVR program defensible, and deep reimbursement expertise is what makes it fair.
Add a service team that stays with you long after you've signed, and you have a business solution that creates a competitive advantage.
Get a free consultationWhy you should choose Driversnote for your reimbursement needs
28 years of FAVR experience
The most comprehensive reimbursement engine
Service that doesn't disappear after onboarding
Mileage tracking that works
Priced to make the switch easy
Drivers track however they want
Mileage tracking that works
Priced to make the switch easy
Drivers track however they want
FAVR is right for your company if…
If FAVR isn't the best fit for your business, we'll tell you honestly and point you toward a program that better suits your needs.
We offer other tax-advantaged programs that can put you and your employees in a better place with no downside risk.
FAVR, answered
No — when it's structured correctly. FAVR is an IRS-compliant plan. Reimbursements are made for documented business driving expenses, not as income. They don't appear on W-2s and aren't subject to payroll tax.
The IRS standard mileage rate is a national average. It doesn't account for the local costs drivers face, the costs high mileage drivers face compared to their lower mileage peers, or the fixed costs of owning the vehicle. FAVR does all three — which means it's fairer to drivers.
Most programs are live within 30 days. We handle the program design, policy documentation, rate design, driver onboarding, driver's license and insurance validation, and payment verification. Your team's job is to point us at the right people.
Yes. Some companies run FAVR for high-mileage field staff and a cents-per-mile program for occasional drivers. We'll help you figure out what fits each group.
The program automatically ensures every driver is getting the right reimbursement based on their mileage. No thinking or guessing required. If they drop below the 5,000 annual business miles threshold for FAVR eligibility, we'll flag it and recommend the right alternative.
Pricing is based on the number of drivers, and you only pay for what you need and use. If you're transitioning from a flat allowance program, you'll likely save thousands each year. Our pricing is simple, straightforward and very attractive. In most cases, the tax savings from eliminating a taxable allowance more than cover the program fee. We'll show you the numbers before you commit.
See how much Driversnote FAVR could save your company
Get a free, no-obligation review of your car allowance or fleet program. We'll show how much tax waste you can recover, how employees benefit, and how it improves your bottom line.
Get your free consultation