Per Diem (Truck Driver Pay)

What is Per Diem for Truck Drivers

Per diem pay for truck drivers is a daily allowance or reimbursement primarily for meals, allowing drivers to recover these expenses immediately in their paycheck instead of waiting for tax deductions.
The term per diem is a Latin phrase meaning per day.
Learn more about Truck Driver Salary here.

Understanding Per Diem Pay for Truck Drivers

Basics of Per Diem
The U.S. Internal Revenue Service (IRS), through its Publication 463, allows for a standard meal and incidental expense deduction. This is designed to obviate the need for drivers to itemize their expenses come tax season.

Standard Deduction vs. Itemized Receipts
If a driver doesn’t opt for per diem pay, at tax time, they have two choices. They can either save all their meal receipts and deduct 80% of those costs or use the IRS’s standard deduction, currently set at $59/day. The driver’s logbook will serve as evidence of their time on the road.

Paycheck Breakdown
A driver’s paycheck typically comprises two parts: the regular cents-per-mile earnings (which are taxed) and the separate per diem reimbursement (which remains untaxed). Some companies might offer a slightly reduced cents-per-mile rate but compensate with an untaxed percentage as per diem.

Advantages and Disadvantages of Per Diem Pay

Impact on Gross Income
Per diem pay reduces a driver’s gross income, which can influence their ability to secure loans, credits, or mortgages. Simultaneously, a lower gross income might qualify them for benefits like student loans, grants, or even lower insurance premiums.

Future Financial Implications
Over time, per diem pay can diminish retirement benefits, like Social Security and Medicare. Furthermore, it can influence one’s unemployment insurance benefits.

Tax Deductions
Drivers who opt for per diem pay cannot claim the standard tax deduction, as the per diem is deemed a reimbursement and not counted as income. If the per diem surpasses the IRS’s set standard meal and incidental expense deduction, drivers must pay taxes on the excess.

Why Trucking Companies Prefer Per Diem Pay

Financial Benefits for the Company
Trucking companies stand to gain from offering per diem pay. With a lower wage bill, the company’s share of payroll taxes to the government reduces, making it an attractive option for them.

Mandatory vs. Optional
While some trucking companies make per diem pay mandatory, others merely recommend it. It’s crucial for drivers to assess their individual financial situations and determine the best option.

IRS Criteria for Per Diem Deductions

For a truck driver to claim the standard meal and incidental expense deduction, the IRS stipulates:

Industry-specific
The driver must work in the transportation sector, and their job should require them to be away from home, necessitating an overnight stay.

Nature of Job
The driver’s occupation should involve transporting goods or people by means of a truck, train, bus, ship, airplane, or barge.

Learn about Cents Per Mile pay structure for truck drivers here.
Learn about 1099 for truck drivers here.
Learn about W2 for truck drivers here.
Learn more about Layover here.
Learn more about Truck Driver Salary here.