Food Truck Tax Deductions: COGS, Commissary Fees, and Operating Expenses
Food truck businesses have a cost structure that separates into two categories: cost of goods sold (COGS) and operating expenses. COGS includes the direct cost of food, beverages, and packaging that go into the products sold to customers. Operating expenses include everything else: truck maintenance, fuel, commissary rent, insurance, permits, labor, and marketing. The distinction matters because COGS is reported in Part III of Schedule C (lines 35-42) and reduces gross income, while operating expenses are reported in Part II (lines 8-27) and reduce net profit.
Cost of Goods Sold (COGS): Raw ingredients, prepared food purchased for resale, beverages (soda, water, juices), disposable packaging (containers, napkins, utensils, bags), condiments, and cooking oils/supplies consumed in food preparation. Most food trucks have COGS of 25-35% of gross revenue.
Operating Expenses (the major ones):
- Commissary rental: $500-$2,000/month (required by most health departments for prep and storage)
- Fuel (truck and generator): $300-$800/month
- Insurance (commercial auto + GL + product liability): $3,000-$8,000/year
- Permits and licenses: $1,000-$5,000/year (varies by city)
- Truck maintenance and repairs: $2,000-$5,000/year
- POS system and payment processing: 2.5-3.5% of card sales
- Labor (if employees): the largest operating expense for trucks with staff
- Marketing: social media, truck wrap amortization, event fees
How should food inventory be tracked for COGS?
The IRS requires businesses that sell products to account for inventory. However, most food truck operators use the cash method of accounting and can treat food inventory as a supplies expense (deducting it when purchased rather than when sold) if total annual gross receipts are $30 million or less (the threshold under IRC 448(c)). For a food truck doing under $500,000 in revenue, the practical approach is:
- Track all food and packaging purchases throughout the year
- Report the total on Schedule C Part III as “Purchases” (line 36)
- Report beginning and ending inventory if you want to be precise, or report zero inventory and deduct all purchases as incurred
The key is consistency. Pick a method and apply it every year.
What about event fees and location costs?
Many food trucks pay fees to park at events, breweries, office parks, or food truck parks. These location fees (sometimes called “lot fees” or “commission on sales”) are deductible operating expenses. If the fee is a percentage of sales (common at events: 10-20% of gross), it is reported as commissions on Schedule C line 10. If the fee is a flat rate for the parking spot, it is reported as rent on Schedule C line 20b.
Catering revenue (private events, corporate lunches) is reported as regular business income. The food costs for catering jobs are part of COGS. Travel to the catering location is a vehicle expense (mileage or actual cost).
Related guides:
- Food truck business structure: LLC, S-Corp election, and the QBI deduction
- Estimated taxes for food truck owners: seasonal income and quarterly payments
- Food truck sales tax, permits, and license deductions: state-by-state compliance
- Retirement plans for food truck owners: Solo 401(k), SIMPLE IRA, and the employee question
- Worker classification for food trucks: prep cooks, window staff, and event helpers
The Business Assessment is a fixed $250. You get a written, CPA-reviewed expense categorization, COGS calculation, and a deduction checklist tailored to your food truck operation.
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Yarik Yarosh, CPA. "Food Truck Tax Deductions: COGS, Commissary Fees, and Operating Expenses." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/food-truck-deductions-cogs
This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.