Fixed and Variable Rate Allowance - FAVR

AAA

DEFINITION of 'Fixed and Variable Rate Allowance - FAVR'

A way of reimbursing employees who use their own or leased vehicles for work-related activities. FAVR payments must be made at least quarterly. Certain restrictions on how and how much the vehicle must be used to qualify for the FAVR allowance are set forth and enforced by the Internal Revenue Service (IRS).

INVESTOPEDIA EXPLAINS 'Fixed and Variable Rate Allowance - FAVR'

An FAVR allowance includes two payment types: periodic fixed payments, and periodic variable payments. The periodic fixed payment includes fixed costs associated with driving and owning the vehicle, including depreciation, insurance and taxes. The total costs for these expenses are calculated and then adjusted to reflect the percentage of time the vehicle is used for business purposes. The periodic variable payment includes operating costs, such as gasoline, oil changes, tires and routine maintenance.







RELATED TERMS
  1. Per Diem Payments

    Generally, a specified amount that employers will pay to employees ...
  2. Transportation Expenses

    An expense incurred by an employee or self-employed taxpayer ...
  3. Mileage Allowance

    A deduction of automobile expenses for people using their vehicles ...
  4. Standard Mileage Rate

    A set rate the IRS allows for each mile driven by the taxpayer ...
  5. Travel Expenses

    The costs associated with traveling for the purpose of conducting ...
  6. Back Pay

    The amount of salary and other benefits that an employee claims ...
Related Articles
  1. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  2. Entrepreneurship

    Tax Credit For Plan Expenses Incurred By Small Businesses

    Determine whether your business is eligible to claim a tax credit for establishing a retirement plan.
  3. Taxes

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  4. Taxes

    10 Most Overlooked Tax Deductions

    The receipts you cram into your wallet could be replaced with cash come tax season.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Investing

    What Tech Companies Seeking Funding Must Overcome

    Tech companies face a unique set of challenges, including a need for timely responses to changes in technology and difficulty recruiting the right talent.
  7. Economics

    Vietnam -- New Asian Hot Spot For Tech Investment

    Vietnam now has a rapidly expanding tech sector that's attracting investors from around the globe due to low business costs and highly skilled workers.
  8. Taxes

    Business Taxes: Not Paying More Than You Have To

    If you're a small business owner, note these potential tax deductibles so that you don't pay taxes that could have been extra revenue in your account.
  9. Stock Analysis

    Will American Airlines Fall Back To Earth In 2015?

    The airline industry enjoys blockbuster profits, and American Airlines Group has been a key beneficiary of the favorable trends that have lifted stocks.
  10. Stock Analysis

    3 Things I Learned From The Container Store's 10K

    Since going public at the end of 2013, The Container Store's shares have fallen by roughly half their value. But not all is not lost.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center