Personal Use

Personal use refers to any use of a vehicle for non-work-related purposes. Under IRS rules, this type of use is not eligible for tax-free mileage reimbursement.

It includes activities like commuting, running personal errands, or driving outside of business needs. The IRS specifically classifies travel between an employee’s home and their primary workplace as personal use.

In vehicle reimbursement programs, clearly separating personal use from business use is essential. Only business use that meets IRS criteria can be reimbursed tax-free, which makes accurate recordkeeping a key part of staying compliant.

In Fixed and Variable Rate (FAVR) programs, reimbursement is based in part on a driver’s business use percentage. This determines what portion of vehicle costs can be reimbursed, with personal use excluded from the calculation.

Personal use also plays a role in company car and fleet programs. When a company-provided vehicle is used for personal reasons, it may result in a chargeback or taxable benefit, depending on how the program is structured.

Tracking personal use helps organizations maintain compliance, ensure accurate reimbursement, and apply the correct tax treatment.