The phrase per diem is a Latin phrase that literally means “by the day” or “per day.” It is a reimbursement payment that trucking services give drivers to cover meals, overnight stays, and other incidental expenses while on the road.
The reality of driving a truck is that you will incur some expenses while out on the job, especially when your stomach starts to growl. Food, lodging, and other expenses are part of being a driver but thankfully, some companies give their employees a special allotment for those expenses. It’s called a per diem and every year, the general rates change with the times.
However, if you’re new to dedicated trucking, a per diem may be a new perk for you. Let’s talk about what it is and how it helps you with your taxes at the end of the year.
What Exactly is a Per Diem?
Drivers can deduct per diem from their taxable income. You just need to know your per diem rates and if you qualify for the deduction.
How Does the Per Diem Work for Trucking Services?
Whether you are in dedicated trucking, regional trucking, or other trucking services, when you’re on the road, you have to eat. Sometimes, you have an overnight trip and need to find lodging. Your trucking company reimburses these funds to you on your next paycheck.
Per diem is usually a set amount per day, but in some cases it can be calculated by the number of miles driven on a given trip or route.
Because you paid these costs out of pocket and were reimbursed later, per diem is not a taxable income according to the IRS. That’s why you can deduct it from your gross income on your yearly taxes, hopefully giving you lower taxes and bigger refunds for the year!
Per Diem Changes in 2023
Overall, there are two important points about per diem in 2023 truck drivers need to know:
- The rate is staying at $69 per day
- The percentage you can claim on your taxes is changing to 80%.
First, the IRS announced that they are keeping the per diem rates for dedicated trucking, regional trucking, or any other trucking services for the fiscal year of 2023 at $69 per day.
Second, in 2023 we saw a rollback to the standard practice of allowing drivers to claim an 80% deduction on per diem from 2023. In 2022, drivers were able to claim a 100% deduction of the $69 through the end of that year thanks to the Federal Consolidated Appropriations Act of 2021, but that is no longer applicable.
How Do I Calculate My Per Diem Rates?
To determine your per diem rates, you first have to consider the relationship between your pay and your tax deductions. As we mentioned, US drivers in 2023 receive $69 per day, and you may deduct 80% of this pay on your taxes. This total is important when calculating your tax deduction later.
When riding with a partner, they also can receive a per diem tax deduction. Any riders without a CDL (Commercial Drivers License) who help with dispatching, bookkeeping, or unloading are eligible for a $33 per diem. The IRS allows them to deduct 50% of that amount from their gross income when filing taxes.
How Do I Qualify for Per Diem Tax Deductions?
The IRS doesn’t ask you to keep receipts as proof to qualify (though it is helpful), but instead places restrictions on eligibility. According to IRS Publication 463, a truck driver must meet these criteria to be eligible for per diem tax deductions:
- You must be away from home considerably longer than an ordinary day’s work
- Your work requires you to seek accommodation while you’re away from home
If you meet these two criteria, you qualify for the per diem tax deduction.
SEE ALSO: Tips to Ungel Diesel Fuel
How Can I Calculate My Per Diem Tax Deduction?
If you have tax preparation software, it should be able to calculate this for you quickly using the most recent numbers. However, if you want to check their work or just like doing math, here’s how to do it:
- Add up the number of days spent driving within the continental US and multiply the result with your per diem rate.
- Next, add up the number of days spent driving outside the continental US and multiply the result by your per diem rate.
- Add the two totals together.
- Multiply the result by 80.
As a formula, it looks like this:
(number of days in continental US) x (per diem rate) + (Number of days outside continental US) x (per diem rate) x 80% = Your Tax Deduction Amount
Here is a handy calculator to help you.
For partners and other people without a CDL, the procedure for calculating per diem tax deductions is the same, the only difference being the fact that they multiply the final figure by 50%.
Perks aside, at Veltri Inc., we offer industry-leading pay rates because we believe in paying for your experience and performance. We’re always looking for passionate, hard-working people to join our team. If you are interested in regional trucking or dedicated trucking opportunities, connect with a recruiter and become a Veltri driver today!