Everything About Per Diem for Truck Drivers

The reality for most truck drivers is that many daily costs like meals and clothes come out of their pocket, even though some companies provide an allowance for on-the-road expenses. The IRS has a per diem program to help offset these costs for eligible truckers. To benefit, drivers must meet requirements related to operating heavy vehicles, being away from home overnight, and tracking expenses. For those unfamiliar, here is everything you need to know about per diem for truck drivers.

What Is Per Diem in Trucking?

The phrase “per diem” originates from Latin, meaning “by the day.” As a trucker, this refers to the compensation for your daily expenses while driving. The IRS views per diem pay as reimbursement for meals and other minor expenses drivers face when away from home. This increases net earnings since fewer taxes are deducted from your wages.

Why Do You Need Per Diem for Truck Drivers?

A per diem fits truck drivers looking to maintain sustainable spending habits. With per diem, companies provide the meal allowance upfront, giving you a better sense of your spending power before purchasing anything. Per diem is not taxed, so your take-home pay can be higher than if you didn’t count the income as per diem.

Although fast payment is the main perk, per diem also lowers reported gross income, which may increase eligibility for loans or assistance programs like Welfare or Temporary Assistance for Needy Families (TANF). Another plus is companies paying per diem usually handle taxes properly, sparing drivers that task.

How Does It Work?

For truck drivers, there are few per diem rules. You’ll only need receipts or to request payment if you’re a corporate truck driver. This simplifies things since you won’t have to file documentation, and the company won’t handle reimbursement. Companies pay per diem differently – some add a per-mile fee to your pay, while others provide a credit card. It’s advisable to keep spending within the per diem amount since employers typically only pay what is necessary.

With per diem, your pay is divided into two- one half is your regular taxable income, and the other covers some travel costs. However, how much per diem you get depends on miles traveled, even though it’s meant to cover your costs. Technically, per diem is non-taxable compensation, not income. You’re still responsible for food and lodging even if reimbursed.

Per Diem for Self-Employed Truck Drivers

Self-employed truckers can deduct per diem expenses during tax filings, and these amounts aren’t subject to tax. This is akin to other business expense deductions for entrepreneurs who invest personal funds into their operations. The United States government permits truck drivers and other entrepreneurs to exclude these costs, ensuring their taxable income doesn’t include reimbursements for work-related outlays, thereby decreasing their tax liability.

Per Diem Rates for A Truck Driver

Every year, the United States government releases per diem expense rates. These rates are a benchmark for self-employed truck drivers to gauge their daily allowable per diem expenses for tax write-offs. Trucking company employers also refer to these rates to establish daily spending limits for their drivers on per diem costs. The rates change based on location.

As per IRS Publication 463, truck drivers aren’t required to detail each purchase when filing their taxes. However, retaining all receipts is crucial in case of an audit. Moreover, a driver’s income is bifurcated into regular cents-per-mile, taxable earnings, and a distinct per tax-exempt diem compensation.

How Much Is the Average Per Diem for A Truck Driver?

There is no single “average” per diem rate for truck drivers, as it can vary significantly depending on the trucking company, route, and other factors. However, here are some general guidelines on the average per diem for a truck driver:

• For tax purposes, the IRS has designated the per diem rate for continental U.S. truckers at $69 per day, effective from October 1, 2021, through January 03, 2024. This represents a $3 increase compared to the prior per diem rate, which expired on January 03, 2024.
• Consequently, when calculating your deductions, you can claim up to $69 per day for each day you spend working away from home throughout the year.
• Private trucking companies often set their own per diem rates, ranging from $40 to $75 per day for meals and expenses. Larger companies tend to be on the higher end of that range. However, specific criteria must be met for eligibility. It’s advisable to consult with your employer.
• Per diem rates also vary by region – generally higher for over-the-road driving long-haul trips through high-cost areas. Rates in the Northeast tend to be higher than in the Midwest.
• Owner-operators who lease onto larger carriers often negotiate their own per diem rates, which could be higher or lower. $50-$60 per day is common.
• Per diem eligibility and amounts can depend on miles driven, hours logged, or specific routes. There are often different rates for layovers, breakdowns, or partial days.

So, while truck drivers have no “average” per diem rate, $50-$75 per day is a reasonable estimate. Factors like experience, employer, and route location can affect the precise per diem amount.

How Do Per Diem Rates Affect Taxes?

Whether you own a truck or work for a transportation company, per diem will impact your tax obligations.

Per Diem Tax Deduction for Truck Drivers

Trucking is a unique business with many expenses that may be deductible from your taxes. Keeping accurate records is key. The primary factors determining if a business expense is deductible include whether the expense is common and reasonable for your line of work and if you maintain documentation of the expense. Common deductible trucking expenses include:

• Association dues
• Cell phone and computer costs
• Specialized work clothing and gear
• Driver training and licensing
• Insurance premiums
• Meals and travel costs while away from your tax home overnight
• Medical exams required for your job
• Office expenses like postage and accounting software
• Products for life on the road, like coolers, bedding, and cleaning supplies
• Trucking industry subscriptions
• Taxes and licenses like Heavy Highway Vehicle Use Tax and CDL
• All vehicle costs, including fuel, repairs, registration, and depreciation

With good record keeping, most ordinary and necessary trucking business expenses can reduce your taxable income.

Under the Taxpayer Certainty and Disaster Relief Act of 2024, expenses for meals purchased at restaurants are now fully deductible at 100%, a change from the previous 80% deduction limit. For truck owner-operators, this alteration simplifies calculating per diem deductions when filing your income tax return.

New Tax Laws

Truck drivers employed in the transportation industry can benefit from per diem pay, as outlined in IRS Publication 463, Travel, Gift, and Car Expenses. The 2024 Tax Cuts and Jobs Act introduced modifications to the requirements for business drivers in contrast to owner-operators, leading to the revised per diem regulations. Since per diem pay reduces your gross income, it can result in reduced tax payments or a larger tax refund.

Starting in 2024, the IRS has reverted to its original policy of permitting a claim for only an 80% deduction. You can claim the standard IRS deduction if you do not possess the necessary receipts. For truckers operating within the Continental US, this standard deduction is approximately 80% of $69 per full day and $51.75 per partial day.

Those working across the Canadian border can claim a base rate of $74, potentially claiming up to $59.2 per diem. Companies that provide per diem payments also include a smaller CPM (Cost Per Mile) and your regular salary, exempt from IRS taxation.

Conclusion

Now that you understand per diem for truck drivers, you’ll be better prepared to make informed financial decisions for yourself. It might be a good time to explore various truck driver compensation structures and discuss your long-term financial objectives with your financial advisor.

If receiving a per diem is a priority, it’s essential to seek out trucking companies that provide this benefit. But also consider your circumstances. Do you need the cash upfront to cover on-the-road costs? Or can you manage those expenses until regular paychecks start coming in? The key is making informed decisions. Now, you can assess how per diem fits into your financial goal.