Trucking & Transport
Two truckers can drive the exact same route, haul the same freight, and earn similar pay — yet one can deduct tens of thousands of dollars a year while the other can deduct almost nothing. The difference comes down to a single classification.
If you're in the trucking, towing, or transport business anywhere in Frederick County or central Maryland, this classification is the single most important thing to get right before anything else about your taxes makes sense. Here's why it matters so much, and what it changes.
A company driver is a W-2 employee. Since the Tax Cuts and Jobs Act took effect, W-2 employees can no longer deduct unreimbursed business expenses on their personal tax return — not mileage, not meals, not equipment. That deduction is simply gone for now, and there's no indication it's coming back in the near term.
An owner-operator, by contrast, is generally self-employed — filing Schedule C as a sole proprietor, or operating through an LLC or corporation. Self-employment opens the door to a long list of deductions a company driver can't touch, but it also means paying self-employment tax (15.3% on net earnings, on top of regular income tax) since there's no employer splitting that cost with you.
Some carriers offer employer-paid per diem programs that build a per-day allowance into a company driver's pay structure rather than letting the driver deduct it themselves after the fact. If you're a company driver, it's worth asking your carrier whether this kind of program exists, since the personal deduction route is closed to you either way.
For self-employed drivers subject to Department of Transportation hours-of-service rules, the per diem deduction covers meals and incidental expenses for each day spent away from your tax home overnight, without needing to save a single meal receipt.
The current rate is $80 for a full day away from home, $60 for a partial day (the day you leave and the day you return), and transportation workers get to deduct 80% of that rate — a notably higher percentage than the 50% most other taxpayers are limited to for business meals. Over a year with 250 days on the road, that 80% rate adds up to a meaningful deduction, often in the range of $15,000 to $17,000.
| Status | Per Diem Available? | Other Deductions |
|---|---|---|
| Company Driver (W-2) | No, unless carrier offers a per diem pay program | None on personal return |
| Owner-Operator (1099) | Yes — $80/day full, $60/day partial, 80% deductible | Fuel, depreciation, insurance, and more |
You need to be away from your tax home substantially longer than an ordinary workday, and require rest to meet your work demands — a quick nap doesn't qualify. Your tax home generally needs to satisfy at least two of three tests: you do business near your main home and use it for lodging, you maintain duplicate living expenses while away, or you haven't abandoned the area where your home and family are based. ELD logs help support these days, but a dedicated per diem log kept day-by-day is the stronger primary record if you're ever asked to substantiate it.
The International Fuel Tax Agreement is a completely separate obligation from your federal income tax return, and it's worth not confusing the two. IFTA reconciles fuel tax across the states you actually drive through each quarter — if you bought more fuel in a low-tax state than you drove there, you generally get a credit; if you drove more miles in a high-tax state than you fueled there, you owe additional tax to that state.
The fuel tax you ultimately pay through your IFTA filings is itself a deductible business expense on your income tax return — but the total fuel cost you paid at the pump is deductible regardless of which state you were in on a given day. The two systems serve different purposes and are filed on different schedules, which is exactly why this is one of the most common points of confusion for new owner-operators.
Buying a truck is one of the largest expenses an owner-operator faces, and the tax code offers real relief for it. Section 179 allows you to immediately expense a significant portion — often the full purchase price — of a qualifying commercial truck in the year it's placed in service, rather than depreciating it gradually. Most commercial trucks over 6,000 pounds gross vehicle weight qualify.
Bonus depreciation works alongside Section 179 and has been restored to 100% for qualifying property under recent legislation, meaning a large truck purchase can sometimes eliminate most or all of your taxable income in the year you buy it. That's powerful, but it requires planning — a deduction that large needs to be sized to your actual income for the year, or it can create complications rather than simply free money.
A large first-year deduction from a truck purchase is genuinely valuable, but it should be planned with your CPA before the purchase, not discovered after the fact. Timing matters as much as the deduction itself.
Beyond per diem, fuel, and equipment, owner-operators have access to a long list of smaller deductions that are easy to overlook individually but meaningful in aggregate:
Many of these same principles apply to towing and local transport businesses, even when long-haul per diem rules don't directly apply to shorter routes. Vehicle depreciation, fuel cost tracking, equipment expensing, and the choice between sole proprietorship, LLC, and S-Corp status are just as relevant whether you're running long-haul freight or a local towing operation with a fleet of trucks.
At Mercer Flanagan, we work with owner-operators, fleet owners, and towing businesses throughout Frederick County and central Maryland to make sure per diem, depreciation, and IFTA-related deductions are captured correctly, and that your entity structure makes sense as your business grows.
Book a free consultation and we'll walk through your specific situation — no pressure, no obligation.
Book a Free ConsultationNo. The Tax Cuts and Jobs Act eliminated the deduction for unreimbursed employee expenses, which includes per diem for W-2 company drivers. Only self-employed owner-operators can claim this deduction directly, though some carriers offer employer-paid per diem programs built into pay structures.
No. IFTA reconciles fuel tax owed to individual states based on where you actually drove versus where you bought fuel. Your federal income tax deduction is for the total fuel cost you paid, regardless of state — they're related but separate systems with separate filings.
It depends on your net income. Below roughly $80,000 in net profit, a sole proprietorship or single-member LLC is usually simplest. Above that, an S-Corp election often reduces self-employment tax meaningfully enough to justify the added payroll and filing complexity.
By Roy Cogliandolo, CPA · Mercer Flanagan · April 11, 2026
This article is for general informational purposes and reflects tax rules current as of 2026. Per diem rates and depreciation rules are subject to change — confirm current figures with your CPA before relying on this information.