Sales Compensation and Expense Allowances

Types of Travel Allowances

There are two main types of travel allowances – automobile allowances and per diems.

Automobile allowances

There are two methods of calculating rates for automobiles:

1. The standard mileage plan. This method pays the employee a set rate per mile traveled. For 2026, this rate is 72.5 cents per mile, but it changes periodically. Updates to this rate may be found at www.irs.gov.
2. Fixed and Variable Rate. The employer reimburses the employee's automobile expenses under 2 categories of costs: fixed and variable. The variable costs are the cents per mile costs of running the car and vary depending on the miles driven. In addition, the employer pays a fixed amount to cover costs such as depreciation, maintenance, leasing and insurance.