Your company could be exposed to risk if your employees drive for work, even if they have personal insurance policies covering their vehicle.
The 3 ways drivers benefit from mileage reimbursements in 2022
Drivers benefit from mileage reimbursement programs. You get to drive the vehicle you want and build equity, and your company pays for 75% of your car.
Drivers: is your company switching to a Cardata vehicle reimbursement program? Or are they considering a switch? As a driver, you stand to benefit. Read on about the ways in which drivers win.
This article will talk mostly about FAVR—Fixed and Variable Rate—reimbursement programs, since that is the kind of program we implement most often. There are, however, different kinds of programs which your company may implement.
How do drivers benefit from Cardata vehicle reimbursement programs?
Reduced administrative burden
Retain vehicle equity
Reduced administrative burden
No more manual mileage logs! We spoke with a driver who has recently switched to Cardata. They said the following about mileage logs.
[Driver:] " Prior to using Cardata's mobile mileage capture application I had a spreadsheet to track my mileage. I would use Google maps to plan my routes, and copy/paste the directions link into the spreadsheet.
"The links were about 5 lines long, so my spreadsheet was a mess."
"I would then have to send that spreadsheet to my manager once per month. They would collect one of those spreadsheets from me and all my colleagues, tally them up, and send them to HR who would reimburse us. It was a pain.
"I often forgot to include trips. I would then try to remember the destinations I'd been to, and
"We were contemplating other ideas for better systems on how to do it, but then we got Cardata. Now we just turn on the app, drive, and get reimbursed."
"Now we just turn on the app, drive, and get reimbursed."
The app records mileage when you're driving for business. Business mileage is then reimbursed through our payment processor, on time and accurately.
Cardata saves the average driver 42 hours of mileage entry per year. You get a full week of your time back.
Here is a list of regular tasks eliminated by Cardata:
- No more manual mileage entry
- No more odometer readings
- No more trip planning with Google maps
- No more submitting reimbursement requests
- Cardata Mobile: set it and forget it. We minimize the number of actions you need to take on the app.
Build vehicle equity
This is an opportunity to build something.
With a reimbursement program, in the simplest sense, your company helps you buy a car. If you are, for example, on a Cardata FAVR program, program terms will often run for 5 years. After that time has elapsed, whatever equity is left in the vehicle is yours to keep.
Here is an example:
Reimbursements generally account for 75% of vehicle expenses, based on the calculation that you drive for work 5 of 7 days. After 5 years you are left with a fine car, mostly paid off. You can keep the car, give it as a gift, or put the equity toward the purchase of a new vehicle.
Aesthetics and lifestyle
Company fleets are made up of identical cars. With reimbursement programs, you can choose to drive a unique car for work.
Your company will select a 'standard vehicle profile' on which reimbursements are based. That standard vehicle must cost less than $51,100. The actual car that you buy does not have to—you can buy any car you like, as long as it costs at least 90% of the standard vehicle profile.
There are two rules you have to follow if you want to guarantee that your reimbursement is non-taxable.
First, the car must not be older than the 'retention cycle' of your program. A retention cycle is the number of years that a car may be driven for business, starting from the year the car is released. Retention cycles are often 5 years, though they can be anywhere from 2-7 years.
The retention cycle calculation is based on the number of the year, which means if you buy a 2022 model as soon as it is released—sometime in 2021—you can add extra time to your retention cycle.
Secondly, your car must cost at least 90% of the program vehicle cost. The IRS does not want you to be overcompensated for driving expenses, so you cannot drive a $20,000 car if the program vehicle is set at $50,000. (In that case, your car would have to actually cost at least $45,000.)
Your reimbursement is based on the program vehicle, not on your actual vehicle. The program vehicle, which Cardata helps your company choose, represents the kind of car you reasonably need to properly do your job.
However, the limit (which increased significantly under the Tax Cuts and Jobs Act) is generous. Here, for example, are five cars that come in under the $51,100 limit imposed by the IRS on FAVR programs.
- Genesis G70 (2021): $36,000
- Tesla Model 3 (2021): $37,990
- BMW 2 Series (2021): $35,900
- Audi A5 (2022): $42,400
- Toyota GR Supra (2022): $43,190 
Yes, you are reading that right. Your employer, on a Cardata reimbursement plan, can buy you 75% of a 382 horsepower GR Supra.
Perhaps 368 lb.-ft. of torque is not your thing. That is fine: the principle of a FAVR plan is to empower you to select and drive the vehicle you like.
Choose a car that fits your lifestyle and aesthetic preferences, open the app, and get reimbursed for the miles you drive in it. As long as it costs at least 90% of your program vehicle, and its age does not exceed your program retention cycle, you will not see tax on your reimbursement.
It is like being able to wear your own clothes to work, rather than having to wear a uniform.
You can buy a vehicle that costs well more than the $51,100 limit imposed on program vehicles. The IRS has determined that driving a vehicle worth more than that is not reasonable for work. However, you may come to your own determination.
Here is a table that lays out what you should spend, as a percentage of your monthly salary, on your vehicle.
A reimbursement plan allows you to drive nicer cars in each of these brackets, since your employer pays for the business use of the vehicle. Whereas payments on a Tesla Model 3 may cost 20% of your salary unaided, with your reimbursement they may fall rather within the 10% category.
(You can read more about how much to spend on your car at Investopedia!)
Can I save more if I drive an electric car?
Electric vehicles, EVs, are approaching price-parity with gas vehicles in the US. Incentives, both statal and federal, are lowering costs even further.
Logically, EVs have fewer parts, therefore fewer repairs, therefore a lower maintenance cost.
While there remain some unknowns about long-term battery life, once thing is undeniable: electricity is cheaper than gas.
So purchasing an electric car on a FAVR plan means the following:
- You are given gas money but you buy electricity.
- You are given repair money for a car with more parts than the car you actually own.
The City of New York analyzed their fleet expenses for a year, and determined that gas cars cost roughly $1600 to repair each year, whereas Electric cars cost only $400.
Cardata's FAVR plans reimburse based on regional fuel and repair expenses. Your fuel and repair expenses will likely be lower if you drive an electric vehicle, so you stand to benefit. Essentially, you will be over-reimbursed for driving.
Cardata is the leader not only in vehicle reimbursements, but also electric vehicle transitions. Learn more by visiting our sustainability page.
How does Cardata support drivers?
- Fair reimbursements
Cardata, together with our clients, develops vehicle reimbursement programs based on data. Drivers deserve to be reimbursed fairly for their driving; to this end, Cardata pulls regional figures for insurance, fuel, repair costs and more, and provides drivers with a tailored reimbursement.
If you live in Tampa, your gas does not cost the same as an LA driver's. Your reimbursement should reflect that, and we guarantee that it does.
- Customer service and support
We are committed to our customers. All drivers, managers, and administrators are supplied with a direct line to the Client Service Associate. We call this stakeholder service, because everyone at your company has something at stake when you retain Cardata. We want the best for everyone involved.
“Our mission is to provide you with timely and accurate reimbursements.”
We will communicate with you via email with critical updates regarding your reimbursement. If any issues ever arise, you will know of it immediately. Our mission is to provide you with timely and accurate reimbursements. We have technical and organizational systems in place to guarantee success.
References and further reading.
Companies with employees on the road choose Cardata. We empower employers to reimburse mileage offering outsourced administration, mobile mileage capture applications, and a full suite of reimbursement tools to simplify the administrative and financial burdens of vehicle operations.
We are the only vehicle reimbursement provider truly invested in supporting drivers, administrators, and executives. Cardata products and services are for all stakeholders.
Founded in 1999, Cardata was launched by former fleet executives who identified a need for a cost-effective and accurate way to reimburse drivers. Since our founding, we have built a 20-year track-record of delivering exceptional vehicle reimbursement solutions. Today, we serve companies ranging from smaller regional enterprises to Fortune 500.