Trucking Tax Deductions for Maryland Owner-Operators

Trucking & Transport

Two truckers can drive the exact same route, haul the same freight, and earn similar pay — yet one can deduct tens of thousands of dollars a year while the other can deduct almost nothing. The difference comes down to a single classification.

If you're in the trucking, towing, or transport business anywhere in Frederick County or central Maryland, this classification is the single most important thing to get right before anything else about your taxes makes sense. Here's why it matters so much, and what it changes.

Owner-Operator vs. Company Driver: The Line That Decides Everything

A company driver is a W-2 employee. Since the Tax Cuts and Jobs Act took effect, W-2 employees can no longer deduct unreimbursed business expenses on their personal tax return — not mileage, not meals, not equipment. That deduction is simply gone for now, and there's no indication it's coming back in the near term.

An owner-operator, by contrast, is generally self-employed — filing Schedule C as a sole proprietor, or operating through an LLC or corporation. Self-employment opens the door to a long list of deductions a company driver can't touch, but it also means paying self-employment tax (15.3% on net earnings, on top of regular income tax) since there's no employer splitting that cost with you.

The Per Diem Deduction: One of the Largest Available to Owner-Operators

For self-employed drivers subject to Department of Transportation hours-of-service rules, the per diem deduction covers meals and incidental expenses for each day spent away from your tax home overnight, without needing to save a single meal receipt.

The current rate is $80 for a full day away from home, $60 for a partial day (the day you leave and the day you return), and transportation workers get to deduct 80% of that rate — a notably higher percentage than the 50% most other taxpayers are limited to for business meals. Over a year with 250 days on the road, that 80% rate adds up to a meaningful deduction, often in the range of $15,000 to $17,000.

What Actually Counts as a Day Away

You need to be away from your tax home substantially longer than an ordinary workday, and require rest to meet your work demands — a quick nap doesn't qualify. Your tax home generally needs to satisfy at least two of three tests: you do business near your main home and use it for lodging, you maintain duplicate living expenses while away, or you haven't abandoned the area where your home and family are based. ELD logs help support these days, but a dedicated per diem log kept day-by-day is the stronger primary record if you're ever asked to substantiate it.

IFTA: A Fuel Tax Matter, Separate From Your Income Tax Return

The International Fuel Tax Agreement is a completely separate obligation from your federal income tax return, and it's worth not confusing the two. IFTA reconciles fuel tax across the states you actually drive through each quarter — if you bought more fuel in a low-tax state than you drove there, you generally get a credit; if you drove more miles in a high-tax state than you fueled there, you owe additional tax to that state.

The fuel tax you ultimately pay through your IFTA filings is itself a deductible business expense on your income tax return — but the total fuel cost you paid at the pump is deductible regardless of which state you were in on a given day. The two systems serve different purposes and are filed on different schedules, which is exactly why this is one of the most common points of confusion for new owner-operators.

Equipment: Section 179 and Bonus Depreciation

Buying a truck is one of the largest expenses an owner-operator faces, and the tax code offers real relief for it. Section 179 allows you to immediately expense a significant portion — often the full purchase price — of a qualifying commercial truck in the year it's placed in service, rather than depreciating it gradually. Most commercial trucks over 6,000 pounds gross vehicle weight qualify.

Bonus depreciation works alongside Section 179 and has been restored to 100% for qualifying property under recent legislation, meaning a large truck purchase can sometimes eliminate most or all of your taxable income in the year you buy it. That's powerful, but it requires planning — a deduction that large needs to be sized to your actual income for the year, or it can create complications rather than simply free money.

The Smaller Deductions That Add Up

Beyond per diem, fuel, and equipment, owner-operators have access to a long list of smaller deductions that are easy to overlook individually but meaningful in aggregate:

• CDL renewal, DOT physical, HazMat endorsement, and TWIC card fees
• ELD device costs and monthly subscription fees
• Tolls, parking, and overnight truck-stop parking fees
• Liability, cargo, physical damage, and bobtail or non-trucking insurance
• A home office deduction, if you handle dispatching, invoicing, or IFTA reporting from a dedicated space at home
• Half of your self-employment tax, which is itself deductible against your income
• Self-employed health insurance premiums for yourself, your spouse, and dependents

For Towing & Local Transport Operators

Many of these same principles apply to towing and local transport businesses, even when long-haul per diem rules don't directly apply to shorter routes. Vehicle depreciation, fuel cost tracking, equipment expensing, and the choice between sole proprietorship, LLC, and S-Corp status are just as relevant whether you're running long-haul freight or a local towing operation with a fleet of trucks.

How We Help Maryland Trucking & Transport Businesses

At Mercer Flanagan, we work with owner-operators, fleet owners, and towing businesses throughout Frederick County and central Maryland to make sure per diem, depreciation, and IFTA-related deductions are captured correctly, and that your entity structure makes sense as your business grows.

• Bookkeeping and accounting that separates fuel, IFTA, and per diem records cleanly
• Tax planning around equipment purchase timing and quarterly estimated taxes
• Owner-operator tax preparation for Schedule C filers and incorporated fleets alike

This article is for general informational purposes and reflects tax rules current as of 2026. Per diem rates and depreciation rules are subject to change — confirm current figures with your CPA before relying on this information.