Definition
A car allowance pays a set monthly amount instead of per-mile reimbursement. Without substantiation, IRS may treat as taxable wages.
California employers must ensure allowances leave employees whole for actual vehicle costs.
7 min · 2026-07-02
Car Allowance: Definition & Compliance for Field Employees
A car allowance is a fixed monthly payment for business use of a personal vehicle — simpler than CPM but risky in states requiring full expense indemnification.
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