23 Mar Are Truckers Affected by the New Tax Law?
In short, yes. However, the real question you likely have in mind is “how is the new tax law affecting truckers?”
Don’t worry, we’re here to tell you everything you need to know. If you’re already aware that the law is affecting you and your career, all you need to know is how exactly, while the rest is irrelevant. With that in mind, let’s give you a quick overview of all the ways the new tax law is affecting truckers:
The New Tax Law Affects the Trucking Industry More Than Others
First of all, it’s vital to explain that the new law affects individuals differently. However, it also affects industries differently, and none more so than the trucking industry.
As you already know, the trucking industry is much different from other industries, and taxes have always affected it uniquely. Even before Trump’s tax law came into effect, due to the nature of the trucking business, you had a wide variety of things to worry about when doing taxes. Now, some things are simplified, but some are more problematic than they were before.
How the New Tax Law Affects Truckers
The main thing that changed for truckers with the new law is how itemized deductions are calculated and taxed. In essence, they aren’t. The new law eliminated most of them, and you, as a trucker, can no longer deduct them. It would take us ages to list all that has been eliminated, so it will be better to tell you what really matters. The itemized deductions are gone, but most standard deductions are now much higher. In most cases, they doubled.
All of this makes things pretty much the same when it comes to deductions, albeit a bit easier to calculate. However, many truckers won’t get as many deductions as they have before.
Furthermore, the daily per diem deduction for on-the-road food expenses is gone as well. Once again, this is not as bad as per diems are covered by the higher standard deductions you are now getting. Unfortunately, many truckers now get less in deductions than before.
As for owner-operators, there are more changes. You can still get per diems for meals and other incidentals, as these count as business expenses. That only goes for people who are in business for themselves, not employed in a company.
Furthermore, most trucking small businesses can get a 20% deduction for pass-through income according to the new law. C corporations have an additional deduction in the form of tax rates that are now 21% instead of the previous 35%.
The Bottom Line
All in all, the new tax law brought about changes that are, in some cases, good, but in others bad. Regular truckers have less to calculate when it comes to deductions, but these are also slightly lower now in most cases.
As for owner-operators, the new law mostly affects them positively, which you have probably already noticed in the form of lower taxes or higher deductions.
The changes will be in effect until 2025, when Congress will review them and consider leaving or eliminating them. If you want to learn more, or you need some help with the IRS, feel free to contact Golden Tax Relief, we are here to help!