Is per diem for company drivers coming back and does it matter?

Recently, a bill was introduced to Congress to reinstate the per diem deduction for employees of trucking companies that do not pay it.    CCJ posted an article here.  I have a couple thoughts on the idea.

How it impacts the driver

If the law is passed and there is a driver that was not paid per diem, they would get a deduction.  Fifty weeks with five days per week at the current rate of $66 per day is $16,500 of which 80% or $13,200 is deductable.  Sounds great so far but wait…previously the deduction was only for the amount in excess of 2% of the taxpayers income.  So if the driver and their spouse work outside the home  the deducted is reduced by the first 2% of their combined Adjusted Gross Income (AGI).  So driver makes $60,000 and spouse makes $50,000 in the year.  2% of that is $2200 so the deduction for per diem drops to $11,000.

But $11,000 is still good, right?  Well now there is the issue of the higher standard deduction.  Married filing jointly taxpayers have a $24,000 standard deduction which means they get the better of that amount or their itemized deductions.  With state and local taxes (Property Tax and Income Tax Withheld mostly) capped at $10,000 so unless you give away a lot of money or have a lot of mortgage interest, you are either still not itemizing or just barely.  The point is it really won’t help as much as one might hope.  Of course, check with your tax advisor about your personal situation, this is all generalizations.

What about the trucking company

Why aren’t you paying per diem?  It saves you money on payroll tax and workers comp insurance.  It also puts more money in your drivers’ paychecks which helps with recruiting.  It’s such a no brainer.  If your software or some internal working will not allow per diem, you need to replace it.  There’s too much at stake; driver recruiting is hard enough, why make it harder?  As always please reach out if you have any questions.  Email us through the contact us page or call 616-608-1800, tweet us, Facebook us whichever you like