Tax Planning for Trucking and Transportation Companies: Per Diem, IFTA, Equipment Depreciation, and Entity Structure
Trucking is one of the most tax-advantaged industries in the country because of the combination of accelerated depreciation on heavy equipment, the per diem meal deduction for drivers, and the relatively straightforward path to S-Corp payroll tax savings. Under IRC 179 and the restored 100% bonus depreciation provisions, a trucking company can deduct the full purchase price of a Class 8 truck, trailer, or other heavy equipment in the year it’s placed in service. Unlike passenger automobiles, vehicles with a gross vehicle weight rating (GVWR) over 6,000 lbs aren’t subject to the IRC 280F luxury automobile limits, so there’s no cap on the Year 1 deduction. For owner-operators, the per diem deduction under IRC 274(n) allows a flat daily rate for meals while away from the tax home overnight, which eliminates the need to keep individual meal receipts and can produce $15,000-$20,000 in deductions per year for long-haul drivers.
Trucking equipment depreciation:
| Equipment | Cost Range | MACRS Life | Year 1 Deduction |
|---|---|---|---|
| Class 8 tractor (semi-truck) | $150,000-$200,000 | 3 years | 100% (full cost) |
| Dry van trailer | $40,000-$60,000 | 5 years | 100% |
| Refrigerated (reefer) trailer | $60,000-$90,000 | 5 years | 100% |
| Flatbed trailer | $35,000-$55,000 | 5 years | 100% |
| Pickup truck (over 6,000 lbs) | $50,000-$80,000 | 5 years | 100% |
| Box truck / straight truck | $60,000-$120,000 | 5 years | 100% |
| Shop / maintenance building | $200,000+ | 39 years | Straight-line only |
| Yard improvements (paving, fencing) | Varies | 15 years | 100% bonus |
Per diem meal deduction (DOT drivers):
| Item | Details |
|---|---|
| DOT per diem rate (Oct 1, 2025 to Sep 30, 2026) | $80/day (CONUS); $86/day outside CONUS |
| Who qualifies | Drivers subject to DOT hours-of-service regulations |
| Deductible percentage | 80% (DOT-regulated, vs. 50% for other businesses) |
| Net deduction per day | $80 x 80% = $64.00 |
| Annual deduction (280 days on road) | $17,920 |
| Tax savings (37% bracket) | $6,630 |
| Record keeping | Days away from tax home; no individual meal receipts needed |
IFTA basics:
| Item | Details |
|---|---|
| Who must file | Motor carriers operating qualified motor vehicles in 2+ IFTA jurisdictions |
| Qualified motor vehicle | 2 axles + GVWR over 26,000 lbs, or 3+ axles regardless of weight, or combination over 26,000 lbs |
| Filing frequency | Quarterly |
| How it works | Report total fuel purchased and miles driven in each state; IFTA redistributes fuel taxes based on where miles were driven |
| Net effect | Pay fuel tax to states where you drove but didn’t buy fuel; receive credits from states where you bought fuel but drove fewer miles |
How do trucking companies minimize taxes?
What fleet and driver costs should trucking companies check?
Once you have employee drivers, workers’ compensation for them is deductible business insurance, and the special transportation per diem still applies to meals on the road. It’s $80 a day in the continental U.S. and $86 outside it for travel from October 1, 2025 through September 30, 2026, with 80% deductible for meals during DOT hours-of-service duty.
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Tractor units for over-the-road use are 3-year property. Trailers and heavy general purpose trucks are 5-year.
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The standard mileage rate isn’t allowed for a pickup or car once you use five or more cars at the same time.
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Fuel taxes are usually part of the fuel price, so they’re deducted with the fuel.
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Tax Planning for Trucking Companies and Owner-Operators: Per Diem, Equipment …
What is the heavy vehicle use tax and who needs to file Form 2290?
The heavy vehicle use tax (HVUT) applies to highway motor vehicles with a taxable gross weight of 55,000 pounds or more, and it’s reported annually on Form 2290. The tax ranges from $100 for vehicles at 55,000 pounds to $550 for vehicles at 75,000 pounds and above, with a prorated amount for vehicles first used after July. Form 2290 is due by August 31 for vehicles used during the prior tax period (July 1 through June 30), and you must file it for each vehicle in your fleet that meets the weight threshold. The IRS requires electronic filing of Form 2290 for returns reporting 25 or more vehicles, and the stamped Schedule 1 proof of payment is required for vehicle registration, so late filing can prevent you from registering or renewing plates.
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Yarik Yarosh, CPA. "Tax Planning for Trucking and Transportation Companies: Per Diem, IFTA, Equipment Depreciation, and Entity Structure." Blue Cloud CPA, September 5, 2026, updated September 23, 2026. https://bluecloudcpa.com/guides/small-business-tax-planning-trucking-transportation-per-diem-ifta
This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.