The special per diem rate for transportation workers to cover meals and incidental expenses is set to increase at the beginning of next month.
On Friday, Sept. 20, the Internal Revenue Service published its Special Per Diem Rates for 2024-2025. In the notice, the agency announced the per diem rates for self-employed truckers and owner-operators would increase to $80 per day for travel in the continental U.S. – $86 per day for travel outside the continental U.S. – for fiscal year 2025.
The announcement marks a nearly 16% increase from the $69 per diem allowed for the past two years. The previous increase, announced in 2021, saw the total dollar amount rise $3. That rate has remained static since taking effect on Sept. 23, 2023.
The new rate structure will take effect on Oct. 1.
What is per diem, and who can claim it?
Simply, per diem is the daily allowance truckers receive to cover expenses such as meals when they are away from home.
Barry Fowler, owner of Taxation Solutions and a contributing writer to Land Line, has provided some clarity on who is eligible to claim per diem expenses.
“Self-employed truckers who are subject to the U.S. Department of Transportation’s hours-of-service regulations and who travel away from home overnight where sleep or rest is required can claim the per diem credit,” Fowler wrote.
To deduct travel expenses, owner-operators must be away from their home residence or tax home longer than what would constitute an ordinary work day. The driver must be away from their home long enough to be unable to complete the trip without sufficient sleep or rest.
It is not necessary to be away for more than 24 hours in order to meet the overnight rule. An example would be traveling on business and renting a room to sleep or rest during a layover. An example of not meeting the rule would be traveling several hundred miles and needing to stop to rest for an hour.
Can company drivers claim per diem?
Unfortunately for employee drivers, the Tax Cuts and Jobs Act of 2017 eliminated their ability to use the per diem deduction on their taxes as of Jan. 1, 2018.
However, the wheels are in motion to restore the per diem deduction for employee truck drivers with the Tax Fairness for Workers Act. Introduced by Rep. Brendan Boyle, D-Pa., and Sen. Robert Casey Jr., D-Pa, the bill currently has 200 co-sponsors in the House and 40 in the Senate.
The Owner-Operator Independent Drivers Association has expressed support when it comes to reinstating employee drivers’ ability to claim the tax credit.
“The elimination of the per diem for company drivers has unfortunately increased the tax exposure for many hard-working Americans who make their living behind the wheel of a truck,” OOIDA President Todd Spencer wrote in support of a previous version of the bill in 2019. LL
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