How to Take Advantage of Per Diem for Truck Drivers

For as long as truck drivers have been running the roads, they’ve had daily expenses to cover while they’re traveling. From food expenses and showers to additional supplies, there are always more incidental expenses just around the corner. However, these travel expenses that pop up throughout the workday have been considered by the IRS, which engineered a solution to help truckers cover these costs. This led to truck driver pay being supplemented by a program called per diem.

What Does Per Diem Mean?

Per diem, meaning “by the day”, is a form of reimbursement in which a portion of a driver’s income is set aside as non-taxable to ease the burden of out-of-pocket living expenses. That extra money that would normally go to taxes can be used to pay for meals and other incidental expenses. Like with many programs, you must meet a few requirements before being eligible for truck driver per diem pay:

• Operating a heavy vehicle
• Traveling more than 50 miles from home
• Must be paid in a cents-per-mile pay structure

Drivers who are paid a daily rate, have an hourly pay rate, are in training, or run locally 50 miles or less from their homes, are not eligible for per diem pay.

How is Per Diem Pay Calculated?

Calculating the exact rate of per diem can vary from carrier to carrier, and can range anywhere from $0.10 CPM (cents per mile) to $0.17 CPM. It’s important to read into your company’s policies, as a set rate may be advertised that neglects to discuss processing charges or fees.

Can I Benefit from Per Diem Pay?

Whether or not this program is beneficial to you depends heavily on your financial situation and future financial goals. Trucking is a unique position, with many expenses that are eligible for deduction across the board, but it doesn’t consider a driver’s individual tax filing status or other dues they may have.

It’s important to consider if you have deductions along the lines of a 401K plan or a company-sponsored savings plan that is based on taxable income, as contributions to those plans may be smaller after electing to join a per diem plan. Be sure to review your previous pay stubs and see if this will affect any savings goals before opting into a per diem plan.

Another notable drawback of enrolling in a per diem plan is the reduction in taxable income on paper. When applying for a large purchase or loan that is based on taxable income, you may not qualify for the amount you would have otherwise with a complete taxable income. When planning on making a big purchase, like a vehicle or a home, be sure to consider if being enrolled in per diem pay will affect it.

Additionally, based on filing status in certain states, a driver may find that they aren’t receiving back a tax refund equivalent to previous years, and in some cases, they may owe money. This is because you’re paying less in taxes over the year.

While this program can yield a great benefit for some, others may find it doesn’t make a huge difference in their paychecks. At Melton Truck Lines, we provide an online calculator that allows drivers to determine the difference in their yearly salary when opting into the per diem program, which can be found here: https://www.fleetflo.com/melton/

Knowing now the benefits and drawbacks of per diem programs, it’s important for a truck driver to think about what is best for them and their family before opting in. At Melton Truck Lines, we allow for drivers to opt in after being hired and during our open enrollment periods, and they may opt out at any time if they determine the program doesn’t work for them. Always reach out and speak with a payroll representative to determine if per diem might help you. Learn more about the other benefits Melton offers on our benefits page!