With a flat mileage allowance program, employees receive a set monthly car allowance to offset their business-related driving costs. While flat allowance programs offer high simplicity and are often perceived as equitable, they may not provide fair reimbursements to employees since they don’t account for differences in fuel costs, taxes, and insurance premiums. A car allowance may also be taxable, reducing participants’ earnings.
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- Predictable costs
- Employee-owned vehicles
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- Employer payroll tax liability
- Reimbursement inequities
- No control over insurance
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While there are potential challenges with a flat allowance program, some organizations determine that there is still a need to utilize a flat allowance program for a subset of their employees.
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With Runzheimer, we provide a managed system that offers increased visibility, reduced tax liability, seamless program management, and IRS-compliant mileage substantiation. Managing your monthly car allowance programs with Runzheimer offers benefits to your employees as well. By reducing taxability of the reimbursement, your employees receive a higher reimbursement.
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Runzheimer can help you review your current company car expense management program. Contact us today to evaluate the best approach for your organization.