In an industry where uncertainties are the norm, one thing remains consistent – tax season.
“Many truck drivers and independent owner-operators can feel overwhelmed because they most likely did not sign up to do loads of paperwork and play CPA in their spare time, it is imperative to know the basics and be prepared when the IRS comes knocking,” Truckstop said. “It doesn’t have to be stressful. When you know the deductions owner-operators are allowed to claim, keep track of your expenses throughout the year with some basic record keeping, and plan ahead, you can face tax time with a lot more confidence and a lot less dread.”
Additional Taxes for Owner-Operators
“You can’t manage your business if you’re not keeping track of it throughout the year….keep up with it every day, every month, and at the end of the year,” said Todd Amen, president and CEO at ATBS.
In addition to state and federal income taxes, truck owner-operators are required to pay the trucking fuel tax known as IFTA, the International Fuel Tax Agreement. As an owner-operator, you must register in your base state and report and pay that state accordingly. IFTA taxes can be confusing, so make sure you understand the ins and outs.
“You can always hire a tax professional to help you, depending on your comfort level,” Truckstop said. “Even so, careful and thorough record keeping on your part will ensure a smooth process and help you avoid over-paying or owing money when you least expect it.”
Most Common Tax Deductions
If you’re an employee of a trucking company and receive a W-2 at the end of the year, your job-related expenses are not tax deductible. If you’re a self-employed owner-operator, however, you can and should deduct all your work-related costs.
As an owner-operator, at the end of the year you will get a 1099 tax form from customers that paid you more than $600 throughout the year. Those forms, plus your own records of income and expenses, are what you report and file along with your 1040. Again, keeping good records and careful documentation will help you back up your deduction claims to ensure you get the full tax benefits and help you avoid an audit.
Vehicle-related Expenses
The IRS considers your equipment—your semi-truck, van, flatbed, reefer, or other type of vehicle used in your trucking operation—to be a qualified non-personal-use vehicle. You can claim all the actual expenses of operating the vehicle as deductions.
- Fuel costs: Any fuel costs you pay on the road hauling loads, along with the fuel taxes you’re responsible for when filing your quarterly IFTA report are tax deductible. You can also claim work-travel-related fees like tolls and parking.
- Maintenance and repairs: Since your truck is considered a qualified non-personal-use vehicle, you can deduct 100% of all vehicle expenses for truck repair and maintenance. A simple rule of thumb is “if you repair it, you can deduct it.” Maintenance and repair expenses on your truck, including labor, parts, oil, tires, tools, and getting your truck washed and detailed can be deducted in full the same year you paid for it. Make sure you keep every receipt, whether the expense is large or small. They all add up come tax time, and you can’t claim it if you didn’t document it.
- Truck payments or leases: Whether you have truck payments on a vehicle you’re working to own or if you lease your work vehicle, those payments are fully deductible. If you own your truck, you can claim depreciation. “Straight-line” depreciation is the standard schedule for a new Class 8 truck, and it’s spread evenly over several tax years. Accelerated depreciation takes a percentage of the truck’s value in a couple of years and a less rate after that.
- Insurance premiums: Business-related insurance premiums, including equipment insurance, can be deducted from your taxable income. This includes commercial liability insurance, property damage insurance, business interruption insurance, and loss of cargo insurance.
- Registration fees and taxes: Any expense directly related to your independent owner-operator business is tax deductible. This might include vehicle registration fees, permits and licenses and taxes, including the Heavy Highway Vehicle Use Tax and the cost of maintaining your CDL .
Travel expenses
- Lodging (hotels, motels): If you’re working away from home long enough to need overnight accommodations, you can claim the lodging bill as a tax deduction. You can also claim expenses incurred with furnishing your sleeper berth. Items that fall under this category might include a mini-fridge, coffee maker, window coverings, bedding, food storage items and first-aid supplies.
- Meals (subject to partial deduction): If you’re an owner-operator driver subject to hours of service regulations, you can claim 80% of meal expenses purchased on the road. You have two options. You can either keep all your food and restaurant receipts and claim your actual meals expenses, including tax and tips, or you can use the per diem allowance. Per diem is the daily non-taxable reimbursement the federal government allows to cover meals and incidentals on the road. The IRS uses the official General Services Administration per diem rates.
- Note: Effective October 1, 2024, the U.S. per diem rate for a full day increased to $80, up from the previous rate of $69, which was in effect from January 1 to September 30, 2024. This means that when you file your 2024 taxes, you will calculate your per diem rate using two different rates.
- Shower fees at truck stops: Many truck stops are conveniently equipped with showers for on-the-road hygiene purposes. Some charge, some don’t. If you pay for this convenience, you can claim it as a tax deduction.
Equipment and supplies
- Devices: Today’s mobile technology is essential to running an efficient and compliant trucking operation and helps independent owner-operators compete with large carrier companies. From GPS devices to tablets, smartphones, and laptops, the cost of these business tools is a tax deduction that will lower your tax bill. If you use the technology for both business and personal reasons, deduct the portion that’s work-related.
- Logbooks: If you keep a manual record of any business transactions, expenses, hours of service, or any other work-related topic, you can deduct the actual cost of the journal or logbook.
- Safety equipment: Any specialized safety gear required for your job, like safety goggles, steel-toed boots, a back brace, or other article designed to protect you while working, can be deducted.
- Work-related clothing and laundry: Everyday clothing (such as jeans and a t-shirt) cannot be deducted, even if you wear it while driving. However, specialized clothing, like coveralls, specialized footwear, or protective headwear can be deducted. A company logo shirt or other garment that represents your company can be deducted.
Home office and communication expenses
- Cell phone bills: If you have a separate cell phone that you use exclusively for your trucking business, you can deduct the entire cost of the plan. If you use one phone for both personal and business use, you can deduct a portion of the cost. You will need to determine what percentage of the time you use it for your trucking operation and deduct that portion. Today’s owner-operators rely on trucking-related apps to run their businesses and find loads. Any and all apps you use to handle any portion of your business can be written off as a tax deduction. Again, keep a record of your purchases and related costs so you can easily itemize them and take the deductions at tax time.
- Internet services for work purposes: If you have Wi-Fi at home or in your cab, you can deduct the cost on your taxes. Wi-Fi in your cab lets you work from anywhere—whether it’s planning your next haul, finding loads, or handling other online tasks.
- Home office supplies: If you conduct portions of your business from home, like most owner-operators do, make sure you deduct office supplies. Items like printer paper, printer ink, staplers, notebooks, and pens and pencils may seem like small deductions, but they all add up to help keep your tax bill as low as possible.
- Health and medical expenses.
- DOT physicals: As a condition of employment, you may be required to get regular medical exams, as required by the DOT. You can deduct any out-of-pocket expenses for these required physical exams.
- Sleep apnea tests or other medical tests related to your job: You can claim any out-of-pocket medical expenses that are work-related. This might include sleep apnea tests,
- Health insurance premiums (if self-employed): If you cover the cost of your own health insurance, you can deduct it from your taxes. It’s not considered a business expense, but there’s a designated section on your tax return to claim health insurance payments.
Professional Fees
- License renewals: You can deduct the cost of renewing any licenses required to conduct your business, including state and local government-required business licenses.
- Association memberships: If you belong to any trucking-business-related or freight-industry organizations that charge a membership fee, that fee is tax deductible.
- Subscriptions to industry publications: If you subscribe to any magazines or websites focused on the trucking industry, you can deduct the full cost of those subscriptions.
Non-deductible expenses
While most business-related expenses are deductible, some are not. The following are not deductible.
- Reimbursed expenses: If someone else pays you back for your expenses, you can’t turn around and claim that expense on your taxes.
- Home or personal cell phone: A landline or personal cell phone not used for business purposes cannot be claimed as a tax deduction.
- Commuting expenses: If your truck is not parked where you live, you can’t claim the mileage you drive between home and where you start your work trips.
- Local route meals: If you’re driving local routes close to your home, daily meals are not deductible.
- Everyday clothing: Even if you wear it while driving, everyday clothing like jeans and T-shirts cannot be deducted.
- Personal trips: You cannot deduct the costs associated with personal trips or vacations, even if you’re using your business vehicle. For tax deductions to apply, the trip must be for the sole purpose of actively working.
Best ways for tracking deductions
- Use a dedicated business bank account and credit card. Keep your work and personal finances separate. This is the easiest way to track your income and business-related costs. It will make taxes easier for you or any tax professional assisting you.
- Implement a digital receipt management system. Keeping track of physical receipts can get messy. Using a digital receipt management system can simplify receipts.
- Utilize mileage tracking apps. Mileage tracking apps are an excellent way to keep track of your mileage. This eliminates the need to manually write down your mileage, which can be time-consuming, less accurate, and subject to human error—like forgetting!
- Maintain a detailed logbook (physical or digital). Documentation is key. Whether it’s manually or using a digital solution, you’ll have no regrets when tax time rolls around. If you use a physical logbook, consider one with a pocket insert or built-in folder to keep your receipts organized.
- Set up a filing system for organizing receipts and documents. A good rule of thumb is to organize receipts and documents by year. It’s recommended to keep records up to three years back. This is a good way to easily retrieve what you’re looking for at any given time.
- Use accounting software designed for truckers. Keeping track of paperwork and staying on top of finances can be time-consuming and daunting. Consider using accounting software specifically for trucking. It dramatically reduces paperwork, automates tedious processes and frees you up to focus on finding loads and driving.
- Consider hiring a bookkeeper or accountant familiar with the trucking industry. If you’re in the market for a bookkeeper or accountant, seek one with freight industry knowledge and/or experience, like ATBS. This will ensure you claim all the deductions you can, minimize your taxes, and avoid an audit.
“Get an accountant and get a system that tells you what your actual number should be based on what you’re actually earning,” Amen said. “An easy thing to do is save 20% of what you get every week, what your net is, and put it in an account that you’re not going to touch. And that’s ultimately what you’re going to pay in taxes and use that for your quarterlies.”
Tips to minimize your taxes
- Maximize retirement contributions (e.g., IRA, SEP IRA, Solo 401(k)).
- Take advantage of per diem rates for meals and incidental expenses.
- Keep detailed records of all business-related expenses.
- Stay informed about tax law changes affecting the trucking industry.
- Consider incorporating your business or forming an LLC.
- Plan major purchases strategically (Section 179 deduction).
- Consult with a tax professional specializing in trucking industry.
“If you can do it, take 10% of every dollar you make and put it in a retirement account,” Amen said. “It’s tax deductible and saves you money on taxes. It’s also going to grow with what it’s invested in. A retirement account is a great thing to do. Be disciplined and put 10% of what you make in a retirement account, and you’ll retire early.”
Important reminders
- Keep all receipts and documentation for at least 3 years.
- Separate personal and business expenses.
- Be aware of the difference between deductible and non-deductible expenses.
- Stay up-to-date with IRS guidelines for truck drivers.
- We strongly recommend making estimated quarterly tax payments to avoid steep penalties and unwelcome surprises. Experts suggest setting aside 20 to 30% of your income for taxes.
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Dana Guthrie is an award-winning journalist who has been featured in multiple newspapers, books and magazines across the globe. She is currently based in the Atlanta, Georgia, area.
