6 Per Diem Questions Trucking Company Owners Ask Most (Is It Legal, Does It Cost You, and More) – Season 2, Episode 1

I get questions all the time from trucking company owners and executives, and they all go in the same theme. You know, ” I’ve heard about per diem, but I have questions.” And they’re good questions. They’re questions about IRS rules.

They’re questions about payroll in general. There’s questions about who qualifies and who does not. They’re questions about how per diem can go wrong. Today, I’m going to answer the questions that I get the most often.

Welcome to the Driven for Success podcast. This is the podcast for trucking company owners who want to build better businesses, make better decisions, and keep more drivers without losing control. I’m Mike Ritzema, your host and owner of Superior Trucking Payroll Service, where our mission is simple: to help trucking families. This podcast is one of the ways that we fulfill that mission.

Today, we’re going to talk about all these questions that we’ve got from trucking company owners and executives. If you find our last episode, you’ll see that we answered the questions that the truck drivers have, and if you go before that, you’ll see a lot of more, a lot of other episodes about per diem, as we’ve talked about this now for a number of episodes, because it’s that important and can be that radically changing for the trucking company and for the drivers. We’ve talked about what it is, how much money it can save both the driver and the trucking company. We’ve talked about how to roll it out in a way that the drivers will see it as a good thing.

We’ve talked about how it affects recruiting and how putting it in your ad will help you find the drivers you’re looking for. Talked about IRS audits and tax times. We’ve talked about driver questions, and today we’re going to answer the questions that trucking company owners and executives have before they decide to implement per diem.

So let’s get to it.

Question number one: Is truck driver per diem legal? This is really the easiest question. Yes. How do you like that unqualified yes, right?

It is. The IRS has allowed special transportation industry per diem rules for decades, and in fact, the IRS publishes the rate every single year. For 2025 and into 2026, they usually make the rates effective October 1st, and they usually come out in late September. So there’ll probably be an IRS revenue procedure that will redefine the rates this year.

Uh, right now, Revenue Procedure 2024-68 is the current one that we use. It’s $80 a day. So again, IRS Revenue Procedure 2024-68. If you Google that, you will find it.

We’ll also put it on our website in the show notes. This is not a loophole. It isn’t some fly-by-night trick. It’s not creative accounting.

I don’t like that term. It’s an IRS-approved reimbursement method. Per diem is not a loophole. It’s an IRS program.

A lot of the owners I talk to who’ve never heard of it or have only heard of it just a little, kind of in the trucking gossip sort of way, think it’s nonsense. They think it’s like when they get told to use a different kind of fuel. That used to be the thing going around, like you use something else to power your engine, and you’d get way better fuel economy. Or they thought it was some way that was a scam.

There are people that will tell you to tell all your drivers to become LLCs, and then you can 1099 them. That’s not true. It’s so not true. So these kinds of things go around, and then per diem gets kind of swirled into that whole whirlwind of nonsense.

Per diem’s real. That’s why I give you the IRS revenue procedure. You can look it up yourself, and you’ll see that it’s real, and you’ll see when we show you the math how much it can save you.

The next question is: Can every trucking company offer per diem? Yes, they can offer it to every truck driver that qualifies, but I would say, instead of saying it that way, I’d say almost. If you’re a last mile company, per diem’s probably not for you, unless you’ve got drivers bringing the things in before that. Your driver, you know, most over-the-road fleets can offer it.

Regional carriers often can offer it. Dedicated fleets can offer it. It’s just that not every driver may qualify for every load. The driver has to be away from there.

They have to be out on the road, basically. At least overnight is the safest way to do it. Uh, we do have some clients who are pretty aggressive and might do it for a driver that wakes up at 5 in the morning and doesn’t get home till 7 at night or something like that, uh, because they can’t really stop for food. However, to be a hundred percent safe, the driver needs to be gone overnight.

And if your driver’s gone overnight, and you’re in multiple meals in incidental markets, which you can look up on the IRS, and the driver is subject to hours of service regulations, which all drivers really are, then you can pay per diem. So the IRS is really looking at this as, is it, does it qualify or not? Does that work qualify? And for most of the time, for, especially for an over-the-road trucking company, it almost always does.

Sleeping in the truck doesn’t create per diem, though. Qualifying travel does. For example, if you slept in your truck, but you were a mile from home, and you had the hours to get home, and you weren’t. You know, that’s, you’re not going to get per diem because you chose to sleep in the truck because the air conditioning worked in your, your one at your house didn’t.

Something like that. So you need to be reasonable about it, but it does. Your drivers qualify if they’re gone overnight, and if they’re, and if they’re gone to multiple meals at incidental markets, which if they’re gone overnight. You really have to work hard not to be in multiple meals and incidental markets, unless you’re just rolling around one city and you’ve got 40 deliveries because they’re each, you know, one pallet or something. Uh, the next question is, ” Does per diem cost my company money?

” No. It actually does the opposite. Your taxable payroll decreases, the wage, the W-2 wage decreases, which means your payroll taxes decrease. Now, when we calculate your savings, which you have truckingpayroll.com, if you go there and look at, there’s a big button, ” Save money with per diem,” you can figure out how much you’ll save for free.

It asks you, like, five questions, and the questions are things like, ” How many drivers do you have?” to help calculate the savings. But your W-2 wages decrease, which means your payroll taxes decrease, and when we calculate that, we don’t count savings and unemployment because we figure your drivers are going to get to the unemployment taxable wage limit one way or the other. So we’re not even counting that.

So in fact, we could be minimizing your savings. You could actually save more than what we’re telling you. But the Social Security tax and Medicare tax that the employer matches, you don’t pay that on per diem. You only pay it on the wage, and we make the wage go down.

That’s a win for you. That’s money in your pocket. Typically, too, the workers’ comp premiums that you pay are based on your W-2 wage and on your, what they call 941s, which is in a quarterly federal employment tax return. Those numbers go down.

You’ll pay less premium. That’s where the savings is. It’s also good for the driver because they’re not paying tax on that per diem either, so they get more in their paycheck, by an average of about $90 to $100 a week. It’s the biggest raise they’ll ever get.

So it’s a win for you, and it’s a win for the drivers, which is rare because this is a time when you and the drivers both win. Usually, it’s a push and pull kind of thing where if the driver gets more in their paycheck, it costs you money, or if the driver, if you’re paying less payroll tax or less workers’ comp, that the driver gets paid less. This is not one of those situations. A good per diem is not a win-lose situation.

It’s a win-win. You know, it’s, it’s amazing. Like, I’m always astonished when companies don’t pay it that good, because you’re leaving so much money on the table. Can be $2,500 per driver per year, and the driver is going to get between $4,000 and $5,000 in extra money in their paycheck each year.

So it’s easy math, right? If you’ve got 20 drivers that are over the road, you could put $50,000 into your pocket. That’s real money. That’s not FDE savings or some sort of voodoo way of getting to a number to try and blow you away and amaze you.

This is real money. I’m sure if you have 20 trucks, $50,000 would be pretty helpful. And you can start saving it, you know, as soon as you start it, and so you’ll see the savings right away on the payroll tax. I’ve beaten that dead horse pretty well, but I’m going to continue to because it’s that important.

The next question is, ” Can I force drivers to participate?” I want to give you the lawyer answer of, ” It depends,” but really, legally, generally, you can. You can force them to participate. However, I would never, never, never, never force them to participate because I hear from drivers all the time about how they got done wrong by per diem, whether it’s a legitimate concern like per diem does actually lower your Social Security payout, and we’ve talked about that, and we’ve talked about what to do about it in previous episodes.

Or if it wasn’t explained to them well and the driver doesn’t understand. So I would never force a driver to take it. I would listen to their concerns. That’s the first thing I would do when they go, ” I don’t want per diem because it’s going to cost me money.

” Okay, let’s listen to them. Let’s talk about this, and let’s see if we can come to a solution that works for both of us. But if they just dig in, and that happens because much like when I talked about all of the, the scamming ideas of how to get, how to save money for the trucking company, the things like the alternative fuel or whatever thing that was I remember from, like, 20 years ago, those kinds of things. The drivers have the same things.

Like, they have the same discussions about what’s going on and how trucking companies might or might not be sticking it to them. So you got to listen to that driver when they say, ” I don’t want per diem. I was told it was bad. It’s bad news.

It’s the worst thing ever.” Okay. Let’s talk about it. And then they’ll explain to you their concerns, and you can give them, if you listen to the last few episodes, you can give them counterpoints to it.

Send them to our website, they can look it up there. But if they still don’t want per diem after all that, because they are just dug in, and we all have those things, right? We’re all people. If that’s the case, let them opt out.

There is no reason to dig in on this if it’s a good driver that you don’t want to lose. I mean, the $2,500 is super helpful, right, for that you’d save on that driver. But losing that driver is going to cost you more than $2,500. And they’re going to see that you’re being reasonable, and you’re actually going to earn relationship equity with them by letting them opt out.

There’s also a chance, too, after 6 months, they’re going to come back to you and be like, ” You know what? I talked to my coworkers who are, uh, doing per diem, and you’re right, I want to do that.” They probably won’t say you’re right, but they’ll say the rest of it. The “you’re right” is kind of just implied.

So the main idea here is, with per diem is, don’t win the argument and lose the driver when you’re talking about per diem. It’s just not worth it. Good drivers are hard enough to find. Uh, I don’t believe there’s a driver shortage, but I do believe that good drivers are hard to find.

And so when you get one, keep them. Don’t lose them over something like this. Never, ever, ever. I hope I am clear about that.

The next question I have is, can I just pay a driver 7 days per diem every single week? You can do it for a week when they’re gone for 7 days because there are drivers that go out for 6 weeks at a time and then go home for 2 or 3 weeks, right? You can pay them for those 6 or 7 weeks, pay them 7 days. You can’t do that all year.

You cannot pay them 365 days in the year. And some trucking companies that have asked me this question, they come at it from, ” I want to save as much as I can.” You know, you’re telling me I can save $2,500 paying basically 5 days a week. Well, if I could pay 7 days a week, that’s $3,500.

And their math fits. They’re right in the sense of the algebra of it. But the problem is, the IRS expects the reimbursement to reasonably reflect qualifying travel. If the driver’s home, they shouldn’t get 7 days per diem.

The driver takes a vacation, those days are not subject to per diem. If the driver is off work, those days don’t count for per diem. And so what happens is, if you pay basically 365 days of per diem in the year, the IRS is going to say, ” Oh, that driver lived in that truck. We now want our payroll taxes for the wage you should have paid them, and we want what the employee should have had paid as well.

We want both sides from you because you’re the one who did it wrong.” Don’t encounter that. Take the 25 hundred dollar win and be happy, because if the IRS sees that every driver gets 7 days every week, they’re going to have questions. And you’ve all dealt with the DOT with questions, and it’s no fun.

The IRS is no more fun than the DOT. I remember talking to a safety compliance person at a trucking company that I knew and respected, and his big thing was, you know, ” The DOT can just come in and shut you down.” And I said to him back, ” Well, the IRS can too.” So let’s not make the news for that, right?

I mean, I’d just be reasonable. Have, you know, your, your per diem should line up to your bills of lading. You’re not going to keep your logs to substantiate per diem anymore. We don’t have a need for that.

It’s all electronic anyway. And you don’t want to subject it to a DOT audit. I understand that. But your bills of lading will show that you picked up in Chicago on August 5th, and you delivered in Dallas on August 7.

And then you picked up in Fort Worth on August 8th, and you delivered back in Chicago on August 10, or something like that. So you’re going to show you left Chicago on August 5th, got back on the 10th, you got 5 days per diem. Easy-peasy. Don’t overreach on this.

That leads into the next question that I get. What kind of records do I need? You know, I have to be able to substantiate this in the event of an audit, right? Well, yeah, you do.

If you get audited and if the IRS asks about it, you need to be able to back it up. You need to be able to say, ” Hey, this is what I did.” You know, bills of lading are going to have almost everything you need to match up to the payroll. Like I just said, they’re going to have, we left.

You know, I signed for the freight in Chicago on August 5th, and then the receiver signed for it on August 7. And so on, and my payroll records match that that was the load that I got paid for, right? So you’re going to be good there. Just keep the bills, and you have them stored electronically anyway.

And yes, it would be a lot of work to go find them. In the event of an IRS audit, you could do it. And they’re not going to ask for every single record for every single driver for the entire year. Uh, and if they did, you just stack up 5 cases of paper of bills of lading and let them go through them.

Don’t really do that. They’re not going to ask for that kind of thing. They’re going to want to substantiate a driver for a week and then another driver for another week, et cetera, but not every driver for every week. A good way to think of it is this: good records make good audits.

That’s really the way to think about it, and you have the records. That’s the great thing about it. Now, I’m not talking about you keeping a sheet of saying, ” Okay, uh, here’s an Excel sheet. This driver got per diem for this load, for this day, and for this load, for this day.

” You could recreate it from the bills of lading if the event ever came up, and you have the loads in your TMS as well, and that might be good enough for the IRS because they’re going to see that you assigned that driver to that load, and then you’re going to see you paid the driver for that load. So you’re probably even home there. Make sure you’re, you can get to old records in your TMS, but I’m confident you can. If you can’t, then we need to talk about what TMS you’re using.

The next question is, can my payroll company handle this? And I’ll give you a little more background on that question. Sometimes people call us, and they don’t want to switch how they’re doing payroll. Their TMS might do some of it for them.

They might use in-house solutions, or they might use another payroll provider. And my answer to that is some can, and some can’t. You know, some payroll companies have some understanding of trucking, or you’ve taught them how to do trucking, and others do trucking companies just like they do a dentist office. But you and I know trucking is different, and per diem is different, and it’s unique to trucking in the way that it’s implemented.

That’s why there are special rules for the transportation industry in the IRS revenue procedure, and that driver pay is different. They get paid by the mile or percentage or however, what, 10 different ways to pay them. So ask your payroll provider how they calculate per diem. Ask them how they handle qualifying days.

Ask them how they document things, and if they struggle to answer, that’s telling you something, that not every payroll company understands trucking payroll. That’s why we got into this business. That’s why our mission is to help trucking. I know this sounds a little commercially, and that is not my intention.

I want you to get what you need, and, uh, what I’m saying is not every payroll company can give you what you need. You may have already worked out a solution for yourself on an in-house software solution. Great. You’re probably fine.

Uh, we’re of course, we’re always happy to help. I mean, I got to keep the lights on, but, you know, we’re still going to answer your questions about per diem. If you call me, I don’t say, ” Oh, are you going to sign up with us?” If you have a question about per diem, we’d love to hear it because your question is a thousand other people’s question, and we can answer it and turn it either on the podcast or in an article.

But it does matter. You have a special insurance agency probably for your trucking. You have a special CPA that may do your taxes, hopefully. So payroll is no different that way.

Having someone who understands what you do really matters. And so hopefully whoever you’re using, if you’re not using us, understands what you’re doing, and if not, of course, we’re happy to talk to you about it. End of commercial.

If there’s one thing that I hope you take away today, it’s this: per diem isn’t terribly complicated, but it does have rules, and when you follow those rules, the drivers have more money in their paychecks. The company has more money in their bank account. Everybody we care about wins. When you ignore these rules, that’s where the problems start.

If you’ve been thinking about offering per diem but weren’t sure where to begin, hopefully today’s episode answered some of your biggest questions. And if it didn’t, send me your question. Like I said, we’ll probably have it in a future episode. And it doesn’t have to be that you’re, you’re promising to sign up with us or anything like that.

Our mission’s to help trucking families, and that’s you.

Thanks for listening to the Driven for Success podcast. If you found today’s episode helpful, I’d really appreciate it if you’d subscribe so you don’t miss future episodes. If you’re enjoying the podcast, please leave us a review. It helps more trucking company owners discover the show.

If you know another fleet owner who has questions about truck driver per diem, share this episode with them. If you’d like help determining whether per diem is right for your trucking company or you want to make sure you’re doing it correctly, reach out to us at Superior Trucking Payroll Service at truckingpayroll.com. We’d be happy to help. Until next time, thanks for listening, and keep driving your business towards success.