Trucking Business Expenses: What Can You Deduct?

Understanding deductible expenses is essential for managing costs effectively in the trucking industry. Proper deductions reduce taxable income and help owner-operators and trucking companies keep more of their hard-earned revenue. Here’s a breakdown of common deductible trucking business expenses, highlighting ways to maximize deductions while staying compliant with tax regulations.

1. Fuel and Mileage

Fuel is one of the most significant expenses for trucking businesses and is fully deductible as a business expense. Tracking fuel costs meticulously is essential, so ensure receipts are well-organized and associated with specific trips or business purposes. Alternatively, the IRS provides a standard mileage rate that can sometimes be more advantageous for owner-operators who don’t wish to track each fuel receipt. For tax year 2023, the mileage rate was 65.5 cents per mile. It’s advisable to calculate using both actual fuel costs and the mileage deduction to determine the best approach.

2. Vehicle Depreciation

Trucks are costly investments, but the IRS allows trucking companies to recover some of that cost through depreciation. Depreciation spreads the truck’s cost over several years, reflecting its declining value. The most common method for trucking businesses is the Modified Accelerated Cost Recovery System (MACRS), allowing for accelerated deductions in the first few years of a truck’s life. Certain trucks may qualify for Section 179, which allows a substantial upfront deduction if used predominantly for business. Consulting with a tax advisor is beneficial to understand which method yields the most benefit.

3. Maintenance and Repairs

Regular maintenance keeps trucks in top shape and minimizes downtime, making it an essential part of business operations. Routine maintenance like oil changes, tire rotations, and brake inspections are fully deductible. Larger repairs, such as engine overhauls, transmission replacements, or body repairs after an accident, are also deductible. Tracking these costs is essential, and maintaining clear records ensures that all repair and maintenance expenses are accurately deducted. Additionally, if repairs are part of an insurance claim, be sure to consult with a tax expert to understand how to handle partial reimbursements.

4. Licensing, Permits, and Regulatory Fees

Operating in the trucking industry requires a variety of permits and licenses, each with associated fees. The cost of commercial driver’s licenses (CDLs), highway use taxes, and permits for oversize loads, hazardous materials, or interstate travel are all tax-deductible. Additional regulatory fees, including state-based fees and weight-mile taxes, are also eligible deductions. Documenting these expenses is crucial, as permits and licenses can vary depending on the routes traveled.

5. Insurance Premiums

Insurance is a substantial yet unavoidable expense in trucking. Premiums for liability, cargo, bobtail, physical damage, and other business-related insurance policies are fully deductible. For owner-operators, personal insurance policies not directly tied to the business might not be deductible, so it’s important to separate personal and business insurance expenses.

6. Meals and Lodging

Truck drivers often incur expenses for meals and lodging while on the road. The IRS allows two methods for deducting these expenses: the actual expense method or the per diem rate. The per diem rate for meals in 2023 was $69 per day for most areas in the continental United States. To qualify, drivers must be traveling away from their tax home for an extended period. Note that for self-employed truckers, only 80% of meals are deductible, so it’s essential to understand the limitations when planning deductions.

7. Tolls and Parking

Fees for tolls and parking directly related to the trucking route are fully deductible. Drivers and companies should keep records of all toll and parking receipts, especially when traveling through high-cost toll areas. It may be helpful to use toll passes or apps to generate electronic receipts that make record-keeping easier and more reliable.

8. Communication Costs

The cost of staying connected is essential for safety, routing, and customer communication. Cell phone bills, internet costs, GPS software, and other communication devices used for business purposes are deductible. However, if the cell phone or internet connection is also used for personal purposes, only the business portion can be deducted. Documenting the percentage used for business versus personal use can maximize deductions.

9. Office and Administrative Expenses

Running a trucking business involves paperwork, and any costs associated with this work are generally deductible. Expenses for office supplies, software subscriptions, accounting services, and even renting office space fall into this category. Many owner-operators run administrative functions out of their homes, allowing them to qualify for a home office deduction if they meet IRS criteria. The deduction can be calculated based on the square footage of the home office space or a simplified method based on $5 per square foot, up to 300 square feet.

10. Interest on Business Loans

Financing a truck, trailer, or other business equipment often requires loans. The interest on these business loans is deductible, helping to offset the cost of financing. It’s essential to differentiate between interest on personal loans and business loans since only business-related interest qualifies for deductions. Trucking businesses should keep accurate records, noting which loans are strictly for business purposes.

11. Association and Membership Fees

Memberships in industry associations, such as the American Trucking Association or state-based trucking groups, are deductible. These associations often offer resources, industry insights, and networking opportunities that benefit the business. Fees for trade groups or industry-specific certifications are also deductible, supporting continuous learning and compliance with industry standards.

12. Professional Fees

Hiring professionals like accountants, lawyers, or business consultants often aids in managing business complexities, ensuring compliance, and planning for growth. Fees for these services are deductible, as they are essential for maintaining a compliant and efficient operation. Since the trucking industry faces unique regulatory challenges, having professional guidance can also lead to cost savings and optimized financial strategies.

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