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Five-Thousand Mile Rule

The 5,000 mile rule is one of the three FAVR tax rules. If a driver is in compliance with all three FAVR tax rules, their reimbursement will not be tested for taxable income. 

To be in compliance with the 5,000 mile rule, a driver must drive at least 5,000 business miles with their personal vehicle per calendar year. 

Note that this minimum mileage amount is prorated based on the number of months that the driver was on a FAVR program. For example, if a driver joins a FAVR program on October 1, they will only be required to drive 1,250 miles for the three months that they are on the program. 

If an employee drives fewer than 5,000 business miles in a given year, they are out of compliance with the 5,000 mile rule and their reimbursement will be tested for taxable income. 

Find out more about FAVR tax rules. If you’re curious to learn more about FAVR programs generally, read this guide to FAVR. Or, speak with a Cardata expert to learn more about how FAVR could impact your business. 

Further Reading