The IRS annual lease value table in Publication 15-B converts a company vehicle’s fair market value into a flat yearly dollar figure that represents the cost of unlimited personal use.1Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits To find your taxable benefit, you look up the vehicle’s FMV on the table, then reduce the resulting annual lease value for business miles, prorate it if you did not have the car all year, add employer-paid fuel, and subtract anything you paid your employer for the privilege.
The Annual Lease Value Table
Match the vehicle’s fair market value to the corresponding range below. The lease value assumes you had the car for a full calendar year and used it entirely for personal driving; the adjustments come later.1Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits
| Vehicle FMV | Annual Lease Value |
|---|---|
| $0 – $999 | $600 |
| $1,000 – $1,999 | $850 |
| $2,000 – $2,999 | $1,100 |
| $3,000 – $3,999 | $1,350 |
| $4,000 – $4,999 | $1,600 |
| $5,000 – $5,999 | $1,850 |
| $6,000 – $6,999 | $2,100 |
| $7,000 – $7,999 | $2,350 |
| $8,000 – $8,999 | $2,600 |
| $9,000 – $9,999 | $2,850 |
| $10,000 – $10,999 | $3,100 |
| $11,000 – $11,999 | $3,350 |
| $12,000 – $12,999 | $3,600 |
| $13,000 – $13,999 | $3,850 |
| $14,000 – $14,999 | $4,100 |
| $15,000 – $15,999 | $4,350 |
| $16,000 – $16,999 | $4,600 |
| $17,000 – $17,999 | $4,850 |
| $18,000 – $18,999 | $5,100 |
| $19,000 – $19,999 | $5,350 |
| $20,000 – $20,999 | $5,600 |
| $21,000 – $21,999 | $5,850 |
| $22,000 – $22,999 | $6,100 |
| $23,000 – $23,999 | $6,350 |
| $24,000 – $24,999 | $6,600 |
| $25,000 – $25,999 | $6,850 |
| $26,000 – $27,999 | $7,250 |
| $28,000 – $29,999 | $7,750 |
| $30,000 – $31,999 | $8,250 |
| $32,000 – $33,999 | $8,750 |
| $34,000 – $35,999 | $9,250 |
| $36,000 – $37,999 | $9,750 |
| $38,000 – $39,999 | $10,250 |
| $40,000 – $41,999 | $10,750 |
| $42,000 – $43,999 | $11,250 |
| $44,000 – $45,999 | $11,750 |
| $46,000 – $47,999 | $12,250 |
| $48,000 – $49,999 | $12,750 |
| $50,000 – $51,999 | $13,250 |
| $52,000 – $53,999 | $13,750 |
| $54,000 – $55,999 | $14,250 |
| $56,000 – $57,999 | $14,750 |
| $58,000 – $59,999 | $15,250 |
The table stops at $59,999. For a vehicle worth more, the annual lease value equals 25% of the FMV plus $500. A company SUV worth $72,000 produces an annual lease value of $18,500 (0.25 × $72,000 + $500).1Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits
The value you look up includes insurance and maintenance but does not include fuel. Fuel the employer pays for gets added separately.
Finding the Fair Market Value to Look Up
Fair market value means the price a buyer would pay a third party in a normal transaction, including sales tax and title fees. It is measured on the date the car is first made available to any employee for personal use, not the date you personally received the keys.1Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits
The IRS allows safe-harbor shortcuts so no formal appraisal is needed:
- If the employer bought the vehicle at arm’s length, the purchase price (plus sales tax and title fees) is the FMV. This safe harbor is not available if the employer manufactured the car.
- If the employer leases the vehicle, it can use the manufacturer’s invoice price plus 4%, the MSRP minus 8% (including sales tax and title), or the retail value from a nationally recognized pricing source such as NADA.
Working the Calculation
Take a sedan with an FMV of $38,500, driven 18,000 miles during the year, of which 7,200 are personal.
Pull the Base Value From the Table
$38,500 falls in the $38,000–$39,999 band, so the base annual lease value is $10,250.
Prorate for Days Available
If you had the car all year, use the full amount. If you received it partway through the year, multiply by days available over 365. Picking up the car on March 15 gives 292 days of availability: $10,250 × (292 ÷ 365) = $8,200.2eCFR. 26 CFR 1.61-21 – Taxation of Fringe Benefits
The standard formula requires at least 30 consecutive days of availability. For shorter periods, employers use a daily lease value equal to the annual lease value multiplied by 4 and divided by 365.
Reduce for Business Use
The table figure represents 100% personal use. Subtract the business-use share. In the full-year version of the example, 10,800 of 18,000 miles are business (60%), so the taxable portion is 40% of $10,250, or $4,100.
Add Employer-Paid Fuel
If the employer pays for fuel used on personal trips, add it back. The employer can use actual cost or a flat 5.5 cents per personal mile.1Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits At 5.5 cents, 7,200 personal miles adds $396.
Subtract What You Paid the Employer
Any reimbursement you make for personal use reduces the taxable benefit dollar for dollar. Paying $100 a month ($1,200 for the year) brings the final taxable fringe benefit to $4,100 + $396 − $1,200 = $3,296. That is the figure that lands on your W-2.
Rules That Constrain the Method
Three rules govern how the ALV method is applied and limit when it can change:
- The vehicle must be available to the employee for at least 30 consecutive days to use the standard proration. Shorter stretches use the daily lease value.
- Once the employer picks ALV for a vehicle, it must stick with ALV for every year that vehicle is provided to any employee. Switching methods mid-stream is not allowed.
- The annual lease value set in year one is locked for four full calendar years. At the start of the fifth year, the employer recalculates using the vehicle’s FMV as of January 1 of that year. The number usually drops because the car has depreciated.
If your employer has been using the same lease value for six years on one vehicle, the four-year recalculation got missed and you may have been overtaxed.
When the ALV Table Is Not the Right Tool
ALV is one of three IRS-approved valuation methods. The employer picks one per vehicle. The alternatives matter if your personal mileage pattern is unusual.
The cents-per-mile rule values personal use at the IRS standard business mileage rate, which is 72.5 cents per mile for 2026.3Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents It is only available if the vehicle’s FMV does not exceed $61,700 when first made available in 2026.4Internal Revenue Service. 2026 Standard Mileage Rates Cents-per-mile usually produces a lower number than ALV when personal mileage is low, and a higher one when personal miles pile up. If you take long personal road trips, ALV is friendlier.
The commuting rule values each one-way commute at a flat $1.50, or $3.00 round trip. It requires a written employer policy prohibiting personal use beyond commuting, the employee must actually follow that policy, the employer must require commuting in the vehicle for genuine business reasons, and the employee cannot be a “control employee.”1Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits
Some vehicles are not valued at all. Clearly marked police and fire vehicles required for on-call duty, ambulances, hearses, and delivery trucks with permanent shelving filling the cargo area are “qualified nonpersonal use vehicles” and fall outside the fringe benefit calculation entirely.5Federal Register. Substantiation Requirements and Qualified Nonpersonal Use Vehicles An unmarked take-home sedan does not get this treatment.
How the Benefit Shows Up on Your W-2
The final taxable value is treated as supplemental wages.6eCFR. 26 CFR 31.3402(g)-1 – Supplemental Wage Payments It appears in Box 1 (Wages), Box 3 (Social Security Wages), and Box 5 (Medicare Wages), and the employer may also list it in Box 14. Social Security tax applies up to the 2026 wage base of $184,500 in combined wages; Medicare tax applies to the full amount with no cap.7Social Security Administration. Contribution and Benefit Base
Employers can elect not to withhold federal income tax on the vehicle benefit while still withholding Social Security and Medicare. If they make that election, they must notify you in writing by January 31 of the year, or within 30 days after the vehicle is first provided, whichever is later.8Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits The benefit still shows up as wages, but you owe the income tax yourself when you file. Adjust your withholding or make estimated payments if you want to avoid a surprise bill in April.
Records That Back Up the Number
The business-use percentage is where the ALV calculation lives or dies. The IRS expects a mileage log showing the date of each trip, miles driven, and the business purpose, kept close to the time of the trip. A weekly log counts as timely; piecing together a year’s mileage from memory in March does not.9Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
Employers must keep fringe benefit records, including mileage logs and vehicle valuations, for at least four years after filing the fourth-quarter employment tax return for the year.10Internal Revenue Service. Employment Tax Recordkeeping As an employee, keep your own copy of the log for the same stretch in case the employer’s records come up short.