Toll Reimbursement

Toll expenses are not included in FAVR reimbursements or the standard mileage rate. Instead, tolls can be reimbursed tax-free using the actual expenses method described in IRS publication 463. Parking reimbursement is also handled this way. 

Under the actual expenses method, drivers are required to track and document specific vehicle expenses, rather than their business mileage, in order to be eligible for tax free reimbursement. 

Most driving expenses can be reimbursed using either the mileage method or the actual expenses method. But some categories of vehicle expenses, like parking and tolls, are not easily expressed in a per mile rate and can only be reimbursed using the actual expenses method. 

For a driver to receive tax free reimbursement for toll expenses, they must keep a record of all tolls paid during business trips. They must also be able to substantiate these costs with a receipt or toll log. They can then be reimbursed tax-free for the exact amount that they spent on tolls.

Because tolls are not included in reimbursement rates, drivers on FAVR, accountable allowance, or cents per mile (CPM) programs can receive tax-free reimbursement for their toll expenses alongside their normal reimbursement. 

To learn more about what is and is not included in FAVR reimbursements, read the FAVR guide. Or talk to an expert about whether a vehicle reimbursement program is a good fit for your business.