What records should trucking business owners keep to support deductions?

Keep receipts and invoices for all expenses, a detailed mileage log showing date, origin, destination, purpose and miles, purchase documents for vehicles and equipment, insurance and license records, and documentation for travel and per diem claims.

Can the cost of buying a truck be deducted in full in the year of purchase?

The purchase cost of a truck is typically recovered through depreciation over time, though certain rules may allow accelerated expensing in the first year for qualifying purchases; proper documentation and allocation between business and personal use are required.

Best Deductions for Trucking Business Owners

Practical takeaways and recordkeeping tips to reduce your tax liability

Owning a trucking business is more than just transporting goods from one place to another; it’s also about managing expenses and maximizing tax deductions that can offset taxable income and improve cash flow. Whether you run an individual truck or oversee a small fleet, knowing what to deduct and how to track those deductions can help you keep more of your hard-earned money. This article breaks down the top tax deductions for trucking business owners and provides some simple recordkeeping tools to support each one.

Vehicle and Equipment Expenses

The truck itself is usually the most valuable asset of a trucking operation. You may subtract costs associated with running and maintaining vehicles, including fuel, oil, repairs, tires, inspections and cleaning. In the case of vehicle expenses specifically, two options are to deduct actual expenses or take a per-mile deduction where allowed. For bigger trucks, and for owner-operators, you can generally get the most accurate deduction by tracking your actual expenses — including insurance, registration and repairs.

Another big category is depreciation: The price paid for a truck, trailer or other piece of heavy equipment is generally recouped over several years through what’s known as depreciation. There are some rules that enable firms to depreciate assets quickly or expense them all in the first year, but they must be documented correctly and split between business and personal use. Save purchase receipts, financing records and mileage logs to back up depreciation deductions.

Fuel and Maintenance Costs

Fuel is one of the largest and most frequent operating expense for any trucking business. SAVE EACH AND EVERY receipt that says how much fuel you bought, the date it was purchased and at which location. You can also deduct costs for maintenance — like scheduled servicing, engine repairs and parts replacement. If you rent equipment, rental payments associated with business use are deductions. Even for crews doing some of the maintenance work in-house, parts and supply purchases should still be monitored so that accurate expense reporting can occur.

Insurance and Licenses

Commercial truck insurance, cargo coverage, liability and other business policies can be deducted based on the insurance premiums. Also qualifying as business expense deductions are the licenses and permits necessary to operate, along with vehicle registration fees and any required state or federal permits. Policy documents, and payment receipts together with any renewal notices should all be kept in the same place.

Wages, Benefits, and Contract Labor of Drivers

Wages, employer-paid payroll taxes and benefits for drivers and other staff are deductible business costs. If you use independent contractors or subcontract drivers, any payments you made to them are also deductible; be sure you have contracts and proof of payment. For owner-operators who operate as corporations or partnerships, weigh the most tax-efficient way to pay owners while still complying with payroll and self employment taxes.

Accommodations, Food and Incidentals Allowance

If you are on assignment overnight from your tax home with a company vehicle or while driving one of your own trucks, some meal and lodging expenses may be tax-deductible. Many business owners use a per diem allowance for meals to simplify accounting, but lodging must be substantiated with receipts. You can deduct only expenses associated with travelling on business, so keep records that document your trip’s purpose and the places and dates you visited.

Equipment that facilitates operations – from mobile phones and walkie-talkies to GPS units and paid services for trip routing or dispatching – are deductible, if they’re used for business. If the device is used for both personal and business purposes, only the business use may be deducted. Keep bills and notes showing business use to support the deduction.

Office and Administrative Expenses

An office is obligatory even for the smallest of trucking businesses: paper, postage, bookkeeping fees, licenses and bank charges. If you have a home office that qualifies for the business use-of-home deduction, you may be able to claim a portion of housing-related expenses, such as utilities and internet. Maintain clear records of personal and business spending, showing how you determined the percentage for costs that were shared.

Professional Services and Training

Amounts paid to accountants, tax preparers, attorneys and business advisers for guidance on the operation of the trucking company are deductible. Training in the trade, specific courses in safety and skills related to those necessary for employment also do qualify. Retain invoices and course descriptions to demonstrate business relevance.

Safety and Compliance Investments

Eligible expenses are also those incurred for safety equipment, hazard assessments and compliance monitoring as well as drug and alcohol testing programs. Safety pays because you lower the number of incidents and maximum amount of potential insurance savings whilst creating a visible business reason for deducting. Document what you bought and any policies or select procedures put in place as part of your purchase.

Interest and Financing Costs

Loans for the business, such as those used to purchase equipment or lines of credit, often carry interest that is also deductible. Be sure to keep personal and business interest separate, as well as keeping track of loan contracts, statements, and proof that your proceeds are used for the intended purpose.

Recordkeeping Best Practices

It’s no secret that good recordkeeping is the key to taking full advantage of deductions. Adopt these practical habits:

Save receipts and invoices: Save all original or scanned receipts for business expenses.

Keep miles driven logs, listing date and origin/destination for each trip. Check to see if travel is a mix of personal trips.
Separate accounts: Have a separate bank and credit card account that you use solely for business activity to make reconciliation less painful.
Depreciation and asset recordkeeping: Save purchase docs, VIN numbers, and financing for equipment (applicable to business).
Document policies: Establish written protocols for per diem, vehicle use and expense approvals to prove consistent treatment.

Common Pitfalls to Avoid

Conflating personal and business expenses without proper documentation.
Failing to account for small recurring costs that can quickly pile up, like towing subscriptions or tiny gear purchases.
Failing to justify business travel in terms of goals and time.
Failing to account for the decrease in business use on assets which experience personal use at a later date.

Conclusion

To ensure that your trucking business is getting every tax deduction it’s entitled to, two things are required: Knowing which expenses are ordinary and necessary to the operation of a trucking business, and having good records to back up each of your deductions. “Maintaining good records will allow easier and more accurate reporting, and submission of tax receipts on time will avoid additional penalties,” he added. Keep in mind that this guide explains some types of deductions and general advice, so work with a tax professional to ensure your deductible expenses are consistent with your own business arrangement or future goals.