Suppose I have $500/mo in "real" expenses. I'm better off if my company reduces my otherwise-salary by $500/mo and gives me an expense reimbursement for even $400/mo. That $400/mo is non-taxable to me and tax-deductible to the company. So, the company saves $100/mo (the difference between $400/mo and $500/mo), and I have an extra ~$100/mo ($400 - $500/mo * (1 - marginal_tax_rate)), assuming a marginal tax rate (combined fed/state/local) of 40%.