What types of employees are eligible for a work car in the US?

In the United States, company vehicles and vehicle reimbursement programs play a pivotal role in business operations across multiple industries. Work vehicles are typically offered as part of compensation or logistics strategies, but eligibility isn’t universal. Instead, it’s tied to specific business needs, roles, and compliance requirements. This post outlines the key categories of employees who qualify, and the reasoning behind these policies, as grounded in vehicle reimbursement and fleet management standards.

Role-Based Eligibility Criteria

Employees typically eligible for work vehicles fall into categories where driving is a necessary and frequent function of their job. These roles often span sales, service, and field operations. For example, field service technicians, sales professionals, and construction supervisors routinely require reliable transportation to travel between job sites, client meetings, or regional offices. In such roles, transportation isn’t ancillary—it’s core to fulfilling daily responsibilities.

Companies in sectors like oil and gas, HVAC, IT, retail, and healthcare are known to reimburse employees for using their own vehicles or to provide company cars to ensure business continuity and cost control. The high travel demands in these industries justify structured vehicle programs.

W2 Employees vs. 1099 Contractors

Eligibility for a company-provided vehicle or a reimbursement program can vary significantly based on an individual’s employment classification. W2 employees, who are full-time staff on the company’s payroll, are more likely to be included in structured vehicle programs. They are often covered under the employer’s insurance policies and are eligible for non-taxable reimbursements under IRS-compliant plans like FAVR and CPM.

In contrast, 1099 contractors are independent workers responsible for managing their own vehicle expenses, insurance, and taxes. While some companies may provide vehicle stipends or negotiate usage reimbursements with contractors, these payments are typically considered taxable income and lack the formal compliance infrastructure of W2 arrangements. Contractors must account for vehicle expenses in their business deductions and are not covered under employer-based vehicle policies.

Employers must clearly distinguish between these classifications when structuring vehicle programs, as misclassification can lead to tax liabilities and legal complications.

Fleet Vehicle Recipients

Some companies maintain a fleet of owned or leased vehicles specifically allocated to employees who require them. Employees in these programs often include regional managers, service supervisors, and logistics personnel. These vehicles are maintained by the company and are assigned based on job function rather than seniority or tenure. Employees in these programs typically drive over 5,000 miles annually for work purposes, aligning with the minimum requirements set by IRS-compliant programs like FAVR (Fixed and Variable Rate reimbursement).

Fleet vehicles are most appropriate for employees in positions that require driving upfitted specialty vehicles, where the employer needs full control over maintenance, branding, or usage monitoring. For instance, organizations with specialized field technicians often maintain fleets to ensure vehicles meet safety and operational standards.

Reimbursement Program Participants

Not every employee is issued a company vehicle. Instead, many are enrolled in reimbursement programs that compensate for business-related driving using personal vehicles. FAVR and Cents-per-Mile (CPM) are the two main IRS-compliant programs used in the U.S. These models are suited for roles that involve varying levels of business travel.

High-mileage employees, such as regional sales representatives or multi-site managers, typically qualify for FAVR programs. These roles must involve more than 5,000 business miles annually, and the personal vehicle used must meet IRS thresholds for cost and compliance. Lower-mileage roles, such as those requiring occasional site visits, are more likely to be reimbursed using CPM structures.

Eligibility is also shaped by vehicle type and cost. For example, under FAVR, the employee’s car must not exceed 90% of the IRS-set vehicle cost limit ($62,100 in 2025) and should meet maintenance and insurance standards.

Compliance and Insurance Requirements

Regardless of whether employees use company-owned vehicles or their personal cars under reimbursement programs, they must comply with specific insurance, documentation, and mileage tracking standards. Employers are responsible for ensuring their employees meet these benchmarks to avoid liability and ensure IRS compliance.

Employees using personal vehicles under programs like FAVR must maintain proper insurance, log business mileage accurately, and provide documentation of expenses. These measures reduce corporate liability and maintain the tax-free status of the reimbursement.

Employees who are not eligible for a company car may still receive a fixed car allowance. However, these allowances are taxable unless structured under an accountable plan, which requires substantiation of expenses and return of excess reimbursements.

Hybrid Eligibility Models

Some companies use hybrid models that combine elements of FAVR and CPM, allocating FAVR to employees who log substantial mileage and CPM for those with infrequent driving needs. This approach allows for fairness and efficiency in allocation. For instance, a territory sales director might be on FAVR, while an office-based staff member who occasionally travels to local sites is reimbursed per mile driven.

Such hybrid approaches expand eligibility without inflating costs and help ensure that the organization provides support based on the actual use case of each employee. These structures also make it easier for companies to scale their mobility offerings across diverse roles without maintaining an oversized fleet.

Specialized Use Cases: Technicians and Operational Staff

Fleet technicians, a niche but crucial group, are typically guaranteed access to fleet vehicles. Their roles involve servicing, transporting, and maintaining company vehicles, which demands constant mobility. These positions also require deep knowledge of vehicle regulations and diagnostic systems. Given the physical nature of their work and the need to handle heavy equipment, access to appropriately equipped vehicles is mandatory.

Similarly, operational staff responsible for equipment delivery, on-site client support, or rapid-response services often qualify for dedicated company vehicles. Their eligibility is justified not just by mileage but by the operational dependency on vehicle availability.

Financial and Tax Implications for Employers

The decision to provide a vehicle is influenced by both cost efficiency and tax considerations. Fleets can be up to 30% more expensive than vehicle reimbursement programs when factoring in maintenance, insurance, and downtime. For employees to be eligible for a company car under these models, their work must justify the added cost through high travel volume, strategic visibility, or operational necessity.

On the reimbursement side, using FAVR allows companies to offer more generous allowances without incurring payroll taxes, provided they adhere to IRS guidelines. Employees also benefit by receiving tax-free reimbursements, enhancing overall compensation value.

Strategic and Operational Considerations

Eligibility is also determined by strategic business goals. For instance, a company expanding its territory might provision vehicles to new regional hires to ensure consistent client engagement. In contrast, a company shifting toward sustainability might restrict vehicle use to roles that can’t be transitioned to Mobility-as-a-Service (MaaS) or reimbursement models.

In regions with high vehicle insurance costs or low public transit availability, roles that wouldn’t otherwise qualify may become eligible to ensure job performance isn’t hindered. Location-specific factors like these often influence eligibility in practice.

Conclusion

Eligibility for a company-provided vehicle in the U.S. isn’t simply a perk—it’s a calculated operational decision. Employees whose roles demand extensive, regular driving and those in field-based technical or logistical functions are prime candidates. In contrast, others may receive reimbursement or allowances that better align with business needs and tax strategy. Ultimately, determining who receives a work car depends on role requirements, compliance standards, and company goals for efficiency and financial management.

Disclaimer:

The content provided in this blog is for informational purposes only and is not intended as legal, financial, or tax advice. While every effort has been made to ensure the accuracy and reliability of the information at the time of writing, Cardata and the author assume no responsibility for any errors or omissions. Readers should consult with a qualified professional to determine how any information discussed may apply to their specific circumstances.