Tax Deductions and Credits for Trucking Companies

21 December 2023

In the trucking industry, your ability to manage operational costs is crucial for the success of your business. Fortunately, trucking companies in the United States have the advantage of using various tax deductions and credits to optimize their financial strategies. Let’s take a look at some of the most useful ones. 

Fuel Tax Credits:

Explanation: Trucking companies can benefit from fuel tax credits, such as the Federal Excise Tax Credit for certain types of fuel.

Example: If a trucking company operates vehicles on off-highway business use (e.g., for agricultural purposes), they may qualify for a credit on the federal excise tax paid for the fuel used.

Section 179 Deduction:

Explanation: The Section 179 deduction allows businesses to deduct the cost of certain qualifying property as an expense, rather than depreciating it over time.

Example: If a trucking company purchases qualifying equipment, such as a new truck or trailer, they can deduct the full purchase price, up to a specified limit, in the year of acquisition.

Heavy Highway Vehicle Use Tax (HVUT) Credits:

Explanation: Businesses that operate heavy vehicles on public highways and pay the HVUT may qualify for tax credits.

Example: If a trucking company has multiple vehicles subject to HVUT and pays the tax, they may be eligible for credits, reducing their overall tax liability.

Work Opportunity Tax Credit (WOTC):

Explanation: The WOTC provides tax credits for hiring individuals from certain target groups, including qualified veterans and individuals receiving government assistance.

Example: If a trucking company hires a qualified veteran, they may be eligible for a tax credit based on the veteran’s wages and hours worked.

Employee-related Deductions:

Explanation: Deductions related to employees, including wages, benefits, and training expenses, can contribute to overall tax savings.

Example: A trucking company providing educational opportunities or training programs for employees may qualify for deductions related to these expenses.

Business Use of Home Deduction:

Explanation: For trucking companies with a home office, a portion of home-related expenses may be deductible as a business expense.

Example: If a trucking company owner uses a home office exclusively for business purposes, they can deduct a percentage of home-related expenses, such as mortgage interest and utilities.

Understanding and strategically applying tax deductions and credits is paramount for trucking companies aiming to optimize their financial health. While this article provides a glimpse into various opportunities, it’s essential for businesses to consult with tax professionals or accountants for personalized advice based on their unique circumstances. By leveraging these tax incentives, trucking companies can enhance their bottom line and ensure sustained success in a competitive industry.