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- June 3, 2025
Tax Deductions for Transportation Businesses
If you own a transportation business, you are already paying a hefty portion of your income as tax. But what if there are options to reduce this tax burden? Yes, we are talking about tax deductions for the transportation business. In this blog, we will explore how tax deductions can help you save money, slash your tax expenses, and improve the bottom line.
So let’s get started.
Why Should Transportation Businesses Care About Tax Deductions?
As we mentioned earlier, tax takes up a big chunk of transportation businesses’ income. So, if you can claim tax deductions, they improve your bottom line. You can bring down your taxable income and reduce your tax liability with these tax deductions.
If you are not claiming each and every tax deduction, you are pouring your tax money down the drain. Accurate tax deductions improve your profitability and keep you compliant with the existing taxation laws. Experts like CROWNGLOBE ensure that you do not miss out on a single tax deduction option.
Now that you have a clear idea of why you cannot ignore tax deductions, let’s understand what tax deductions you can claim.
Can You Deduct Vehicle Expenses?
Yes, vehicle expenses often form the largest tax deduction for transportation businesses. So, it’s one of the most important tax deductions for your transportation business. As of now, you can claim deductions via two methods:
#1: Actual Expenses Method
You can deduct actual costs like fuel, oil changes, repairs, and insurance. But for this, you will have to keep accurate records and receipts for the same. Let’s say your company is spending $50,000 on maintenance; you can claim every penny of that $50,000.
#2: Standard Mileage Rate Method
If you do not want to or are unable to keep records of your expenses, then you can use the IRS mileage rate to calculate tax deductions. For the year 2024, this rate is 65.5 cents per mile. So, if your fleet logged 20,000 miles, you can claim $13,500 in deductions. This is a simple method, but you might impact.
Both methods are good, but you should compare them. Pick the one that offers the highest deductions. Even better, hire an expert like CROWNGLOBE who can guide you in choosing the best method.
How Does Depreciation Work for Your Fleet?
Depreciation deducts the wear and tear on your vehicles over time. And if you are operating multiple vehicles or heavy trucks, it’s a great option to reduce your tax liabilities.
Here’s how it works:
- For passenger vehicles, Section 179 allows immediate deductions up to $28,900.
- Heavy-duty trucks and trailers qualify for larger first-year deductions. You can use bonus depreciation to deduct up to 100% of the asset’s cost.
Let’s understand it better with an example: Let’s say your company buys a semi-truck for $120,000. Through bonus depreciation, you could deduct the entire amount in the first year.
What Are the Rules Around Fuel Costs?
Fuel costs are deductible, but you will have to document these costs meticulously. You can deduct fuel costs like diesel, gasoline, and even alternative fuels like CNG or LNG. If you are using a fleet that operates on biodiesel or electric charging, then you can also get specific tax credits. You can use fuel cards for additional benefits. These cards make tracking simple and help you present records during tax audits.
Are Maintenance and Repairs Fully Deductible?
Yes, they are. Every oil change, tire replacement, and engine repair qualifies for a tax deduction. In fact, routine expenses like vehicle inspections or replacing wiper blades count for tax deductions.
Example: Let’s say you are spending $3,000 monthly on routine truck maintenance. You can claim $36,000 annually in tax deductions.
How Can Office-Related Costs Be Deducted?
Many transportation businesses overlook deductions for office expenses. We often come across clients who are not aware of all office-related cost deductions! Make sure you don’t make that mistake. Your dispatch software, accounting tools, and GPS subscriptions are all deductible.
Other office-related deductions include:
- Rent office space.
- Utilities like electricity and the internet.
- Office supplies like pens, paper, and storage cabinets.
What About Travel Expenses for Drivers?
Drivers often travel for days or weeks. You can deduct their lodging, meals, and incidental expenses. As a leading tax accountant for transportation businesses, we strongly recommend using the IRS per diem rates for simplicity.
Example: A trucker spends five days on the road. The per diem rate is $69 per day. Deduct $345 for meals and lodging.
Can You Deduct Insurance Premiums?
Today, insurance is a must-have necessity for any transportation business. It keeps your fleet and drivers financially protected. IRS understands this, too, and hence, your vehicle insurance, cargo coverage, and liability insurance are all deductible.
Can You Deduct Training and Certification Expenses?
Ongoing training keeps your drivers compliant and skilled. You can deduct expenses for CDL renewals, hazmat certifications, and safety workshops. Today, transport companies offer online courses to their drivers and team members. So these online courses, too, qualify for tax deductions. If you are spending $10,000 annually for safety training, you can deduct the full amount.
What Records Do You Need to Keep?
This is very important. If you are claiming tax deductions but fail to maintain the records, the IRS can deny your deductions. The reason is that the IRS demands detailed proof in case you are being audited. You can use software to organize receipts and expenses. You can also get professional help from a reliable agency like CROWNGLOBE.
When Do You File?
As a transportation business, you typically have to file taxes quarterly. If you miss the deadline, you pay the penalties. This will eat into your profits. So the better option is to partner with an accountant who specializes in transportation taxes.
Where Can CROWNGLOBE Help?
Managing transportation tax deductions demands expertise. That’s where CROWNGLOBE comes in. Our team streamlines tax management, maximizing your deductions while ensuring compliance. Whether you run a fleet of ten or a hundred, we handle your tax needs seamlessly.
Wrapping Up
Tax deductions help your business save money and keep your business competitive. We hope this guide has made you aware of all the top tax deductions for a transportation business. Always consult with experts to stay ahead. Start today. We are always up and ready to assist you.
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