Per-Diem Pay

Per-diem pay is a compensation type that covers daily expenses for truck drivers. This payment method aims to reimburse drivers for meals and incidental expenses incurred during travel. By providing a non-taxable allowance, per-diem pay helps reduce the taxable income of drivers, increasing their net pay.

Benefits of Per-Diem Pay

Drivers often appreciate per-diem pay for several reasons:

1. Tax Advantages: Per-diem pay is non-taxable. This means the allowance isn’t added to the driver’s gross income, reducing the overall tax burden.
2. Simplified Expense Tracking: Since per-diem is a fixed daily amount, drivers don’t need to save every receipt or detail every expense related to meals and incidental costs.
3. Increased Take-Home Pay: With less taxable income, drivers enjoy a higher take-home pay compared to a higher gross income without per-diem.

Calculation of Per-Diem Pay

The exact daily rate of per-diem pay can vary but is often set based on federal recommendations. As of the latest data, the standard per-diem rate is around $69 per day for meals and incidental expenses incurred within the continental United States. Companies may offer different rates, and it’s crucial for drivers to understand how their per-diem is calculated.

Impact on Owner-Operators

For owner-operators, per-diem pay affects logistical and financial planning:

1. Expense Management: Knowing a set daily allowance helps in budgeting for trips.
2. Record Keeping: Although receipts aren’t necessary for every meal, keeping basic records is still advisable.
3. Contract Negotiations: Owner-operators should factor in per-diem pay when negotiating contracts with carriers. This can influence average CPM (Cents Per Mile) earnings and overall compensation packages.

Regulatory Considerations

While per-diem pay offers many benefits, drivers and owner-operators need to stay compliant with IRS guidelines:

1. Daily Limits: The IRS sets deductible limits for per-diem pay.
2. Documentation: Although detailed receipts aren’t required, drivers must still document the time, place, and business purpose of the travel.
3. Exclusions: Per-diem only applies to overnight trips. Local drivers usually don’t qualify.