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Per Diem Payment Methods for Truck Drivers

Per Diem Payment Methods for Truck Drivers

Per diem payments have become a vital component of a truck driver’s compensation package, offering financial benefits and tax advantages. As trucking companies seek flexibility in payment structures, various methods for disbursing per diem have emerged. In this article, we’ll explore different ways companies can pay per diem to their truck drivers.

There are a few different ways you can pay per diem to your drivers; per day, by the mile and as a percentage of truck driver pay. But it’s important to know the difference, and which is better for your trucking company, because if you choose to pay by the mile or as a percentage of truck driver pay you may be missing out on some savings.

One change when becoming a truck driver is that you’re often away from home, and need to buy all of your meals or snacks on the road. In order to help, many trucking companies provide daily per diem pay as an alternative way of compensating you for your daily expenses such as meals or lodging. The term per diem translates to ‘by day’ in Latin, so the most common and easiest way to pay per diem is to pay $69 (maximum) per night away from your home.

Another way to pay per diem is by the mile. Let’s say you have a driver making 42 cents per mile and for a week they drive 2500 miles in five days. They would have made $1050.00, $330.00 of which would be classified as per diem. For a trucking company in Michigan that would mean you would save $44.39 in taxes for that one employee, in one week. As the employer, you’ll save over $2300.00 per driver per year in worker’s compensation insurance premium and payroll taxes, shown in the table below. Your company will also benefit from improved driver retention as the take-home pay for them just went up almost $4,400.00 per year.

Your company can also choose to pay per diem as a percentage of truck driver pay. For this example, if you make $1,180 in load pay, your employer can set a per diem rate of 15%, so that $180 can go untaxed. The advantages to this way of paying per diem is that you’re always guaranteed X%, no matter how many miles you drive, or days you work. But per diem as a percentage depends on the company you work for, and can vary from trucking company to trucking company.

 However, if you choose to pay by the mile or as a percentage of truck driver pay it is essential to keep in compliance with the IRS rules on per diem. Make sure to read these IRS rules thoroughly before deciding on one method or the other.

Bottom Line:

The choice of how to structure per diem payments for truck drivers depends on the company’s goals, the preferences of its drivers, and compliance considerations. Whether opting for a fixed daily rate, a mileage-based system, or a percentage approach, the key is to strike a balance that benefits both the company and its drivers. A well-thought-out per diem strategy not only contributes to driver satisfaction but also ensures compliance with tax regulations and industry standards.

Learn More About Per Diem Below

Written by Mike Ritzema

Before founding Superior Trucking Payroll Service, Mike was the CFO of a trucking company with 80 trucks and a thriving brokerage. This experience gave him the perspective that a payroll solution has to make the lives of the office people better.  All the solutions he has designed are to benefit everyone.  Our company mission is to help trucking families and that includes the company owners, the drivers, and the office.

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