Hi! I’m Lee, and I’m your mileage mechanic from Cardata. 

I’m here to help you understand your mileage reimbursement options, fix what's not working, and keep your program running smoothly.

When it comes to mileage reimbursement, there are three main options.

There’s Cents-Per-Mile—a simple approach where employees get reimbursed based on the miles they drive, usually a good fit for occasional drivers.

Then there’s Tax-Free Car Allowance—a more flexible option that lets companies offer a car allowance while staying tax efficient.

And finally, there’s Fixed and Variable Rate Reimbursement, or FAVR—which brings the most structure and precision to how you reimburse driving.

Now the real question is…Which one is actually right for your business?

The answer? It depends on your employees, because there’s no one-size-fits-all solution here. There’s just the best fit for how your team actually drives.

Let’s take a closer look – under the hood.

Understanding Which Program is Best For Your Business

We start with mileage—it’s the biggest factor in choosing the right program.

If your team has high-mileage drivers—people who are consistently driving more than 5,000 business miles a year —FAVR is usually the best fit, that’s because it’s built for precision.

It accounts for both fixed costs, like insurance, and variable costs, like fuel.

When you’re reimbursing a high-mileage team, that level of accuracy can make a big difference—for both cost and fairness.

Now, if your team drives less than that—so mileage is more moderate —Cents Per Mile can be a great option.

It’s simple, it scales directly with miles, and it’s easy to run without a lot of overhead.

If you want something more predictable than CPM, but less structured than FAVR—while still offering a car allowance—that’s where a Tax-Free Car Allowance fits in.

You can combine a fixed payment with mileage tracking and still keep things tax-efficient.

Next, you’ve got to consider your employees’ roles, and their compliance implications.

Programs like CPM, TFCA, and FAVR are all designed to be tax-free when they’re set up correctly, and assigned to the right employees.

Have part-time or contract employees? A simple CPM program will give you, and them, the best tax benefit. 

For high-mileage roles like sales or field service, FAVR is usually the fairest fit.

FAVR lets you reimburse real business costs the way they actually happen—while adjusting for where your employees live.

For managers and business leaders, TFCA allows you to offer a tax-efficient car allowance as an attractive perk; even if they don’t drive enough to qualify for FAVR.

The Big Idea

It all comes down to fit, and your business goals. It’s important to ask yourself: What are you optimizing for?

If you want simplicity…CPM is usually the easiest to run.

If you want flexibility and predictability…TFCA can strike that balance.

And if you want accuracy and cost control at scale…FAVR is the most precise option.

But… you don’t actually have to choose just one. Some of the best programs are a mix.

You could use FAVR for your high-mileage sales teams, CPM for occasional drivers, and TFCA for leadership’s lower-mileage roles.

Because the reality is, different drivers have different needs, and your program should reflect that.

If you want to learn how companies actually make the switch, come with me to the next video, where I’ll walk through how to transition to a tax-free mileage reimbursement program—without disrupting your team.

See you there!