Incentives and Tax Breaks on Trucking Businesses in America

Trucks remain an integral part of the economy of the United States. They facilitate the distribution of products and materials throughout the country, leading to the smooth functioning of supply chains. The federal government has put in place policies that seek to foster positive practices that, in turn, help in improving efficiency, profitability, and reducing costs in this industry. These policies seek to aid small and large trucking operators by making their business sustainable.

Decreases In Tax Due To Deductions From Depreciation on Trucks and Equipment

One of the most appealing tax advantages that an operator in the trucking business can benefit from is the depreciation that is allowed on trucks, trailers, and any other equipment used in the business. Under the Modified Accelerated Cost Recovery System (MACRS) and Section 179 Deduction , businesses can recover cost incurred in the purchase or leasing of vehicles and equipment used in the business over a period of time. S179 deduction allows businesses to fully deduct the cost of qualified assets up to the annual limit and in the year that they begin operating. This greatly favors companies in the trucking business that are acquiring new units or replacing older ones.

Tax Credits Due To Fuel Tax Credits And Tax Exemptions

Fuel costs are a big expense for a trucking business. However, tax credits and exemptions can help mitigate the burden.

Fuel Tax Exemption from Federal Government is primarily available to businesses that utilize fuel for off-road activities such as refrigeration, powering units, or other auxiliary systems. Also, some states implement fuel tax breaks during certain activities or times. To receive these breaks and remain compliant with tax regulations, accurate record keeping of fuel expenditure is imperative.

Green Incentives are related to promoting eco-friendly vehicles. For example, trucking companies that deploy green strategies are eligible for tax deductions based on the cost of doing business and Environmental Impact Mitigation. In addition, the company can also benefit by employing an Alternative Fuel Excise Tax Credit program and tax incentives for buying electric cars and hybrid cars. There are also opportunities for claiming tax deduction from spending on devices aimed at emission reduction, fuel effectiveness enhancement, aerodynamic devices, and idle reduction technologies.

Meals and other incidental expenditures incurred by truckers and owner operators can be reimbursed based on per diem rates facilitated by the IRS Federal Government. An advantage of this strategy is that the IRS sets limits per month, hence it becomes easier to track business expenses, and also guarantees maximum deduction on taxes. This is beneficial as it reduces the burden on taxable income, and reduces the need for tracking every expense incurred, which is particularly valuable for long-haul drivers.

Tax breaks and incentives are powerful tools for transportation companies in the United States, aiding in reduction of expense and increasing profit.

Per diem, fuel tax deductions, and green incentives are all techniques designed to enhance the growth of the industry - however, these are not all that trucking businesses must capitalize on. In this scenario, staying informed and consulting with a professional ensures that businesses can achieve utmost success moving forward.

Note: For more information, visit IRS website