The Problem with Car Allowances

Equal does not mean equitable. One size does not fit all.

A flat, taxable auto allowance seems straightforward. it's easy to administer. It seems fair because all employees get the same amount. But is it really fair?

Employee A covers a territory of 100,000 square miles in the deep south.
Employee B covers a territory of 150,000 square miles in the pacific Northwest.

Gas prices average nearly one dollar more per gallon in the pacific Northwest than the deep south, but both employees receive the same car allowance per month. Does that make sense?

Gas prices fluctuate over time and very widely by state:

You have responsibility to protect your employees income from the volatile costs of operating their personal vehicles. A traditional auto allowance falls short in several ways:
Insufficient reimbursement violates California Labor Code 2802(a).
Employee may drive less to make up for insufficient reimbursement.
Taxes reduce employee creating unnecessary payroll taxes.
Auto insurance taxes, and registration vary by employee.
The allowance amount is arbitrary, not based on real data.
Employees must pay taxes on the allowance as compensation.
If your organization pays a flat car allowance, it's time to find a fairer, more accurate way to reimburse mobile employees.

mBurse specializes in customized reimbursements.

An mBurse solution will:

  • Remove unnecessary tax waste from your auto allowance pollcy.
  • Deliver geographically cost-sensitive reimbursements based on accurate data.
  • Boost employee morale and productivity through fair, Individualized reimbursements.
  • Create a tool to attract and retain talent, reducing turnover costs.
  • Provide helpful administrative tools that integrate with your existing systems.
  • Employ accurate, automated mileage capture.
  • Measure your business travel ROI and productivity.

Our innovative reimbursement plans save money and bring peace of mind. We implement and manage your customized policies from start to finish.

Hallmarks of a quality corporate vehicle policy:

Risk Mitigation
Annual motor vehicle record checks, insurance verification, and state labor code-compliance
Cost Saving
Savings and benefit analysis with reporting analytics that save money
Integration with your existing systems to save time by automative administrative tasks

We are a team of tax mavens, technological innovators and reimbursement specialists driven by our core values and purpose. Our core values and high standards of quality and ethics drive us to provide the best solutions and services while exceeding our client’s expectations.

As an mBurse client, you have the advantage of obtaining multiple services from one organization with a single point of contact, making it easy for you to outsource these functions without the administrative work. We partner with our clients to create innovative solutions delivering immediate and measurable value driven results for their business and stakeholders.

Three reasons to get started now:

  1. Your have not addressed your car allowance in over 10 years. 
  2. Your car allowance is not based on data
  3. Your car allowance is taxed