What Every Truck Driver Should Know About Per Diem in 2024

Whether you’re a contractor, company driver,  self-employed, or an owner-operator, per diem is an incredible tax deduction that all eligible truck drivers should be taking advantage of in 2024. 

That being said, it’s absolutely critical for your finances and peace of mind to understand the nature of per diem rates and how they’ll impact your take-home pay and taxes this year.

Introduction to Per Diem Programs

“Per diem” is a Latin term that can be roughly translated into “for each day,” which, in this context, refers to the daily allowance (i.e., non-taxable reimbursement) truckers receive to cover expenses like meals and incidental expenses when they travel further than 50 miles away from home. 

This system simplifies the reimbursement process for truck drivers, especially those who regularly long haul throughout the continental U.S. and Canada. It does so by providing a fixed daily rate to eligible drivers instead of requiring them to complete detailed expense tracking reports. 

It’s important to note that carriers are not obligated to offer per diem to company drivers. However, many do, but with stipulations. 

2024 Per Diem Rates

It’s important to note that per diem rates are subject to change every Internal Revenue Service (IRS) calendar year, especially during times of massive political transitions. 

Here are the current 2024 per diem amounts:

• For travel within the continental United States: $69 per day
• For travel outside the United States: $74 per day 

Calculating Your Per Diem

This is a rather cut-and-dry process that’s relatively simple, but does require absolute attention to detail. Generally, here’s how it’s done:

1. Identify Travel Days: Determine the number of days you’re on the road. Be sure to include both full and partial days in your calculation. 
2. Apply the Correct Daily Rate: For 2024, use $69 per day within the continental U.S. and $74 per day for travel outside.
3. Consider Partial Days: If you’re not on the road for a full 24 hours, you can still calculate a partial day rate (typically 75% of the full-day rate).
4. Use Tools for Accuracy: Use tools like the Drivewyze per diem calculator to ensure accuracy and ease of calculation.

Pros and Cons of Per Diem Programs

Like anything else, there are benefits and drawbacks to per diem programs. Below, we’ll explore what to know about how per diem programs can affect you.

Advantages

• Tax Savings: Per diem can significantly reduce your taxable income while potentially lowering overall tax liabilities. 
• Simplified Record-Keeping: Instead of having the burden of tracking every meal or incidental expense, truckers and fleet managers can rely on a set per diem rate.
• Consistent Reimbursement: Per diem offers a predictable and steady way of reimbursement that makes budgeting a lot easier for many truck drivers.
• Flexible Spending: Drivers have the freedom to spend their per diem as they see fit. 

Disadvantages

• Impact on Loans and Benefits: Having a lower reported salary can affect your eligibility for loans, mortgages, and other financial benefits.
• Complexity in Tax Filing: Understanding and applying per diem rates correctly can be confusing and frustrating come tax season. 
• Dependency on Company Policy: If you’re a company driver, keep in mind that per diem policies can vary significantly between trucking companies, which can have a great effect on overall earnings. 

• Ineligibility for Certain Tax Deductions: Truck drivers who get per diem pay might not be eligible for certain itemized deductions that are related to travel expenses, since they are usually covered by the per diem.
• Variability in Rates: Per diem rates can change yearly. This requires drivers to stay updated about the latest IRS guidelines and adjustments.

Overview of the Tax Implications

Per diem deductions and payments have a wide-ranging effect on truck driver taxes. From the reduction in taxable income to increased refunds to impacts on future benefits, it’s important to have a grasp of how these reimbursements will affect your overall finances. 

It’s important to know that although the Taxpayer Certainty and Disaster Relief Act once allowed a 100% deduction, it’s now back to 80%, which is still a great tax relief, but also something to be noted.

With that in mind, it’s recommended to consult with an experienced tax professional to ensure you’re maximizing your tax benefits while following all necessary legal requirements. 

Tips On Using Your Per Diem

Effectively managing per diem can be incredibly beneficial for truckers and their tax professionals. Here are a few tips for making the most of your per diem:

• Budget Wisely: Spend it as it was intended, meaning meals, incidentals, lodging, etc. 
• Save Receipts: Though it’s not required for tax purposes, keeping your receipts can help you track spending and manage finances better.
• Understand Company Policy: If you’re a company driver, you should familiarize yourself with your employer’s per diem policy, especially regarding eligibility, rates, and any conditions for partial days.
• Plan for Off-Days: Budget your per diem funds for days when you’re not on the road but still incur certain expenses.
• Record Keeping: Maintain a highly detailed log of your travel days and expenses in case any queries arise from the IRS.

FAQs About Truck Driver Per Diem

Does Every Truck Driver Qualify for Per Diem?

No, not all truck drivers automatically qualify for per diem allowances. Generally, eligibility depends on the length of the trip(s), employment status, and the policies of the trucking company (if you’re an employee). 

For the most part, over-the-road (OTR) drivers who spend nights away from home are more likely to qualify. Owner-operators and company drivers may have different eligibility criteria based on many factors. Plus, if you drive for a carrier, you may be able to opt-in or out of per diem, depending on your needs.

Why Do Trucking Companies Use Per Diem Programs?

Trucking companies implement per diem programs for several reasons. They include, but aren’t limited to: 

• Simplifying the reimbursement process for both the company and the drivers
• Recruiting new drivers
• Helping companies manage their payroll taxes more effectively 

At Drivewyze, we’re here to assist truckers and trucking companies in every aspect of their business. Check out how our full lineup of trucking calculators can enhance your operational efficiencies and improve your bottom line.