Business Use Percentage

Business use percentage (BUP) is the share of a driver’s total vehicle use that comes from business-related driving.

In vehicle reimbursement programs, especially Fixed and Variable Rate (FAVR), BUP is used to determine how much of a driver’s fixed vehicle costs should be reimbursed. These fixed costs typically include expenses like depreciation, insurance, and registration.

To calculate the fixed portion of a reimbursement, total monthly vehicle costs are multiplied by the assigned BUP. This ensures that only the business-related share of those costs is reimbursed, rather than the full amount.

In practice, a few things are worth keeping in mind:

• Most companies apply a standard BUP across all drivers for consistency and simplicity
• A higher BUP increases the fixed portion of the reimbursement
• In FAVR programs, BUP is typically capped at 75% to stay aligned with IRS guidelines

Because BUP directly affects how much drivers are reimbursed, it plays an important role in building programs that are fair, accurate, and compliant.