How Much Monthly Car Allowance Should I Request for 250 Miles per Week of Driving?

When a job requires driving 250 miles per week, an appropriate monthly car allowance becomes a critical factor in determining fair compensation. This article aims to guide you through the process of calculating a reasonable monthly car allowance. We will break down the necessary expenses and considerations, including fuel costs, depreciation, maintenance, and insurance.

Breakdown of Mileage and Calculation

To start, we need to calculate the monthly mileage. It's straightforward given the weekly mileage.

Mileage Calculation Weekly Mileage: 250 miles Monthly Mileage: 250 miles/week × 4 weeks 1000 miles/month

Estimated Cost Per Mile and Monthly Allowance

The IRS standard mileage rate for 2023 is 65.5 cents per mile. This rate is commonly used by businesses in the United States. Let's use this rate to calculate the monthly car allowance.

Monthly Allowance Calculation:

Total Allowance Monthly Mileage × Cost Per Mile 1000 miles × 0.655/mile $655

Additional Considerations

Mileage is not the only factor to consider when calculating the car allowance. Here are additional elements to take into account:

Fuel Costs: The actual cost of fuel can vary depending on your vehicle's fuel efficiency and local gas prices. If your vehicle gets, for example, 30 miles per gallon (mpg), and the average cost of gas is $4.00 per gallon, the cost per mile for fuel would be ≈ $0.133. Maintenance and Repairs: Factor in expenses for regular maintenance, oil changes, and tire rotations. These costs can vary, but a good estimate is around 10-15% of the car's value annually. Depreciation: Vehicles depreciate over time. A conservative estimate for depreciation could be 5-10% of the vehicle's value per year. Insurance: Business use might increase your personal insurance premiums. If you currently pay $600 per year, and this increases to $800 per year due to business use, that additional cost should be considered.

Final Recommendation

Considering these elements, a reasonable monthly car allowance range is $600 to $700. This range accounts for typical vehicle expenses and allows for slight variations based on specific circumstances. However, discussing this recommendation with your employer is crucial to reach an agreement that is fair and acceptable to both parties.

Examples for Context

Here are a couple of examples to give you even more context:

If your typical commute is 180 miles per week, which is 36 miles round-trip per day, 250 miles is 70 miles more than your uncompensated commute. In Los Angeles, there are individuals who drive 100 miles round-trip per day for their uncompensated commute. This is double the weekly distance of 250 miles when considering just the driving aspect.

In both cases, the additional 250 miles are significant, and discussing the Federal standard mileage rate of 65.5 cents per mile can help ensure fair reimbursement.

By considering all these factors, you can make a strong case for a monthly car allowance that reflects the true cost of your additional driving. Good luck!