Trucking Taxes for Owner Operators: Expert Tips from a CPA

By Jen Gordon, CPA, Owner of Capital Tax & Consulting

As a CPA who has advised a variety of business owners for over twenty years, I’ve seen how overwhelming tax obligations can be—especially for trucking owner operators. Between maintaining your rig, lining up loads, and tracking your miles, it’s easy to let taxes slip. Yet with the March 17 deadline for business tax returns looming, proactive planning is essential. (If you’re a single-member LLC filing on your personal 1040, your return deadline isn’t until April 15 but preparing well in advance is still key to avoiding last-minute stress.) Below are the key areas I recommend focusing on to help ensure compliance, minimize tax liability, and keep your operations on the road to success.

Understanding Self-Employment Taxes (and When to Consider an S-Corp)

Owner operators pay self-employment taxes, covering both the employer and employee sides of Social Security and Medicare. If your net profit is large enough—often between $75,000 and $100,000—it may be advantageous to elect for your LLC to be taxed as an S-Corporation. In this scenario, you’d pay yourself a reasonable salary (subject to payroll tax) and then take additional earnings as distributions. This can reduce self-employment tax, but it also requires filing a separate corporate tax return and handling payroll. Make sure to weigh the extra administrative work against the potential savings.

Why Separating Personal and Business Finances is Critical

Commingling your personal and business expenses is a fast track to confusion and potential IRS audits. Not only does this practice make it harder to track deductible expenses, but it can also weaken liability protection in certain business structures. By maintaining a dedicated business bank account—and ideally using trucking-specific accounting software—you’ll have a clearer picture of your profits, losses, and cash flow.

Tracking and Deducting Expenses for Trucking Businesses

A top concern for owner operators is ensuring all legitimate business expenses are recorded and deducted properly. From fuel and maintenance to tolls, parking fees, and insurance, each cost can reduce your taxable income. If you spend money “in the production of income,” it likely qualifies as a write-off. The best way to capture these deductions is by using a dedicated business bank account (as mentioned previously) and accounting software. Keep digital or physical proof of every business expense so you’re prepared in the event of an IRS audit.

Why Proper Worker Classification Matters for Owner Operators

Beyond the cost of fuel, driver salaries are typically the next largest operating expense for a trucking company and worker classification is a crucial point for trucking businesses of any size. Misclassifying drivers as independent contractors instead of employees—or vice versa—can lead to penalties and back taxes. True independent contractors generally own their trucks, set their own schedules, invoice you for services, and drive for multiple clients. Employees, on the other hand, might drive company-owned vehicles and rely on you for most of their earnings. For more detailed guidelines, consult the IRS’s 20-factor test on whether your drivers should be classified as employees or contractors.

Navigating Multi-State Tax Compliance in the Trucking Industry

Because trucking often spans multiple states, multi-state tax compliance can get complicated. Simply passing through a state usually doesn’t create a tax obligation, but picking up or dropping off freight might establish taxable nexus. On top of that, you’ll need to file International Fuel Tax Agreement (IFTA) reports and possibly pay state-specific Highway Use Taxes (HUT). Each state has its own nexus rules, so be sure to research your destinations or consult a tax professional to avoid any unpleasant surprises.

Fuel Tax Credits: An Overlooked Opportunity

Fuel tax credits are commonly missed, even though they can significantly reduce your tax liability. For example, if you operate a refrigerated truck and use off-road fuel to power the refrigeration unit, you might qualify for credits. Some states also allow credits for high fuel taxes, but you’ll need meticulous records of your purchases. These credits have a strict filing window (usually one year from purchase), so organization is key.

Mastering Depreciation for Trucks and Trailers

Trucks and trailers are capital assets, meaning you typically can’t deduct their entire cost in one tax year. Instead, you depreciate them over a designated lifespan. However, if you meet certain requirements, Section 179 or bonus depreciation may allow you to write off a larger portion in the first year—especially if you expect significant profit. Major upgrades (like a new engine or sleeper cab) usually require capitalization and depreciation, although they may qualify for immediate expensing if they are under $2,500 per item. Under the de minimis safe harbor rule, which I strongly recommend every owner operator implement, you can immediately expense items costing $2,500 or less rather than spreading the deduction over multiple years. If an upgrade exceeds $2,500, you’d typically follow standard depreciation rules or consider accelerated options like Section 179.  If using the de minimis safe harbor rule, you must make the appropriate choice to do so in your tax filing.

HVUT and Other Tax Filings You Can’t Overlook

Heavy Vehicle Use Tax (HVUT) applies to trucks over 55,000 pounds and is filed annually via Form 2290. Missing this filing can trigger penalties that escalate quickly. If you have any employees—even a small administrative staff—you’ll also need to handle payroll taxes for Social Security, Medicare, and unemployment insurance. Proper withholding and timely remittance help you avoid costly fines and interest charges.

Maximizing Your Per Diem Allowances on the Road

Meals and incidental expenses can add up quickly for long-haul truckers. The IRS allows an 80% deduction for per diem expenses when you’re traveling away from your tax home overnight. For 2025, these rates jump to $80 per day within the continental U.S. and $86 outside the U.S. If you choose not to use the per diem, you must maintain detailed receipts. In most cases, per diem simplifies record-keeping and can offer a larger deduction—just make sure your logs verify that you were indeed away from home.

The Crucial Role of Quarterly Estimated Tax Payments

Many owner operators get hit with penalties because they don’t realize they need to pay estimated taxes throughout the year. As someone who’s self-employed, you’re responsible for both the employer and employee portions of Social Security and Medicare (self-employment tax). If you don’t pay enough on a quarterly basis, you could face interest and penalties at tax time. A general rule is to set aside 25–30% of your net income to cover federal and state taxes. Keep an eye on the IRS thresholds: if your adjusted gross income is under certain limits (e.g., $150,000 for married filers), you’ll need to pay at least 100% of your prior year’s tax or 90% of your current year’s tax to avoid penalties.

Final Thoughts: Why Proactive Tax Planning Pays Off for Owner Operators

From worker classification and per diem rules to multi-state tax obligations and depreciation strategies, trucking taxes can be incredibly complex. The best way to stay ahead is through regular bookkeeping and proactive planning. Set aside time every month to reconcile your accounts, review profit-and-loss statements, and confirm you’re on track with estimated taxes. If you start feeling overwhelmed, hiring a tax professional—even for a consultation—can save you money (and headaches) in the long run.

Remember, your primary focus is keeping your rig on the road. With the right systems in place, you’ll minimize the stress of tax season, avoid IRS complications, and keep more of what you earn. Safe travels and happy filing!

This article is provided for informational purposes only and should not be interpreted as legal, financial, or tax advice. Every business is unique, and the information presented may not address your specific situation. Always consult with a qualified tax professional or financial advisor before making decisions regarding your taxes and business operations.