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IRS per diem rate going up by $3 next month

First move in 3 years sets rate in lower 48 at $69

Making money in trucking is always difficult. (Photo: Jim Allen/FreightWaves)

For the first time in three years, the allowable driver per diem is going up.

The Internal Revenue Service said the per diem for transportation workers in the 2021-22 period will be rising to $69 for travel in the continental U.S. and up to $74 for travel outside the continental U.S. Both figures represent an increase of $3.

The new rate goes into effect Oct. 1, the start of the federal budget year. The earlier rate had been in effect since 2018-19.

While what the IRS permits as the per diem does not automatically convert into the per diem paid to drivers, it largely works out that way.

In an email to FreightWaves, Steve Pletcher and Kelli Block, partners at Scopelitis, Garvin, Light, Hanson & Feary, said that “in practice, many motor carriers effectively adopt the IRS meal and incidental expense rate as their per diem rate, which makes a certain amount of sense because that is the amount the IRS has effectively deemed it reasonable for certain transportation workers to incur in meal and incidental expenses while traveling away from home on business.”

The increase may seem small. But if it is taken for 200 days on the road by an independent owner-operator, that works out to $600 of tax-free compensation because the per diem is viewed by the IRS as expense reimbursement. That type of compensation is not taxable. Depending on a driver’s tax rate, $600 could be seen as equaling $900 to $1,000 of taxable compensation.

The Scopelitis attorneys said the $3 increase is the same size as the one that went into effect in the 2018-19 tax year. However, that increase came after just two years, as opposed to the three years for this increase.

Troy Hogan, a partner with the transportation advisory firm of Katz, Sapper & Miller, said the per diem rate is not just a factor for independent owner-operators. He said employee drivers who are paid a linehaul rate will usually get an expense fee per mile.

However, Hogan added that the daily amount of the per-mile payment to employee drivers generally is capped at the IRS allowable rate for the per diem. 

In a presentation Hogan made to an American Trucking Associations meeting along with Pletcher on the per diem, he noted that in order to qualify a driver needs to be on the road for a significant period of time during a working day: “must be away from tax home longer than an ordinary work day,” according to the presentation. 

But that doesn’t mean it’s a 24-hour rule. They must be “away long enough that they cannot reasonably be expected to complete the trip without sleep or rest.”

Given that under most circumstances the per diem is not taxable — the presentation makes clear that the question can sometimes be a bit complicated — “paying employee drivers with per diems can be an effective way to increase driver pay while protecting company profits,” it said.

If a company pays an employee a reimbursement tied to expenses that exceeds the $69 per diem rate, it creates risks, Pletcher and Block said in their email. If payments exceeding $69 occur, they said, “then the IRS may very well disqualify the entire per diem plan.”

“In our experience, most motor carriers have found it more administratively practicable to simply set a cap that is at or below the IRS rate (and back that amount up with some evidence demonstrating it is reasonable to anticipate drivers incur at least that amount of meal and incidental expenses while working away from home overnight),” they wrote.

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  1. Robert

    One of the main reasons why the lifestyle of a trucker is in decline; the inflation of the cost of fuel makes it tough to accept $1 a mile. Feds limit how many miles a trucker is allowed to travel, fuel tax surcharge exceeds wages. So from that standpoint, all truckers are slaves. Allowing legal weed in all states is the other issue, Feds expect truckers to have a valid medical card. This is why all developers of battery powered trucks are engineering an autopilot solution. Electric trains are moving tonnes of freight too, CSX, CN, BNSF. Days are short for the superman trucker. I’d love to hear your comments on this.

  2. miced

    I get paid over $87 per hour working from home with 2 kids at home. I never thought I’d be able to do it but my best friend
    earns over 10k a month doing this and she convinced me to try. The potential with this is endless. Here’s what I’ve been doing… w­w­w.j­o­b­s­7­0.c­o­m

  3. FLE+LLC

    Realistically, because of the cost of goods, food and hotel rooms the per diem should be at least $120 per night … In the IRS wisdom you don’t even get the full amount to begin with

Comments are closed.

John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.