How do trucking companies handle per diem and driver meal deductions?

Drivers subject to DOT hours-of-service regulations qualify for an 80% meal deduction instead of the standard 50% that applies to most business meals. This is one of the more valuable tax benefits in transportation, but it only works if the bookkeeping tracks per diem separately from wages and other expenses.

There are two ways to calculate the deduction. The simpler method uses the IRS standard per diem rate for transportation workers, which is currently $69 per day for travel within the continental U.S. Drivers don’t need to save individual meal receipts when using this method. They just need a log showing which days they were away from home overnight on DOT-regulated runs. The alternative is tracking actual meal expenses with receipts, but most drivers and carriers use the standard rate because it’s easier and often more favorable.

How per diem flows through the books depends on whether the driver is an employee or an owner-operator. For employee drivers, the carrier can pay per diem as a non-taxable reimbursement up to the IRS daily limit. This per diem payment is not wages. It should not show up on the W-2 and should not have payroll taxes withheld. In the company’s books, it gets recorded as a travel or per diem expense, completely separate from payroll. If a carrier lumps per diem into wages, the driver pays unnecessary income and payroll taxes on money that should have been tax-free, and the company overpays its share of payroll taxes too.

Owner-operators handle per diem differently. Since no employer is reimbursing them, they claim the deduction directly on their Schedule C. They multiply the number of qualifying travel days by the IRS daily rate, then apply the 80% deduction. This reduces their taxable self-employment income, which lowers both income tax and self-employment tax. Keeping a simple travel log with dates, destinations, and trip purposes is enough to support the deduction if the IRS asks.

The bookkeeping mistake that causes the most problems is mixing per diem with regular meal expenses or rolling it into driver pay. Per diem for DOT drivers gets the 80% treatment. General business meals only get 50%. If everything is dumped into one meals category, you either lose the higher deduction or claim it on expenses that don’t qualify. Either way, it’s wrong.

For carriers with both local and long-haul drivers, only the drivers subject to DOT hours-of-service rules qualify for per diem. A driver doing local deliveries who sleeps at home every night doesn’t meet the overnight travel requirement. Your books need to distinguish between these drivers and their expense treatment.

Working with bookkeepers in Fairfax who understand trucking-specific rules makes a real difference here. The per diem deduction is straightforward once the chart of accounts and payroll categories are set up correctly. But if the foundation is wrong, the errors compound every pay period and every quarter until someone catches them, usually at tax time when it’s expensive to fix.