The per diem deduction benefit for company drivers will be restored by the new bill introduced in both the House of Representatives and the Senate. After it was eliminated in the 2017 Tax Cuts and Jobs Act, the deduction, which saved hundreds, or even thousands of dollars a year in tax liability, depending on how many days a year drivers worked, would again restore per diem deductions.
Two Democrats from Pennsylvania – Sen. Bob Casey and Rep. Conor Lamb – introduced the bills. The Senate bill has been filed to the Senate’s Finance Committee, and the House bill has been filed to the Ways and Means Committee. In Senate, the bill has 13 co-sponsors, all of whom are Democrats, and in the House of Representatives, the bill has 12 co-sponsors – 11 Democrats and one Republican.
What would the new bill allow?
The new bill would allow drivers to resume deducting 80 percent of the federal per diem allowance (which is currently $66 a day) from the annual tax bill. Dubbed the Tax Fairness for Workers Act, this change would include other small changes to the 2017 tax reform package. The 2018 tax year, fillings which were due in mid-April, was the first year that drivers could not take the deduction.
Drivers would be allowed to deduct their per diem only if carriers do not provide per diem reimbursements, according to the new bill. There’s been a growing trend for carriers to incorporate per diem pay into drivers’ pay packages, accelerated by the per diem changes in the 2017 Tax Cuts law, allowing drivers to take advantage of the per diem benefit even if they can’t enter it as an income deduction for tax purposes. Drivers still receive 80 percent of the per diem rate set by the IRS as tax-free earnings under these packages.
How much would the drivers deduct?
Under the current 66$ per diem rate that was set by the IRS, if the bill become law, drivers would a be able to deduct $52.80 from their annual income for every day they spent working away from home. On average, if a driver drove five days a week, that would equate to an annual deduction of $13,728.
Depending on their annual income, that would reduce a drivers’ annual tax bill by $1,300 or more. Although the deduction could be significant, drivers could only take that deduction if they chose to skip the standard deduction of $12,000 for individual filers and $24,000 for married couples.
The bill would allow union dues to be deducted from taxable income, in addition to restoring per diem pay for truck operators and other transportation workers. Owner-operators were not affected by the per diem changes instituted by the 2017 law, and they can still deduct per diem as a business expense.