Unlock Fleet Savings With Per Diem Amid Economic Uncertainty
Updated: Nov 22, 2022
The freight market has experienced steady softening over the past few months while the nationwide average price for a gallon of diesel fuel hovering around $5.36 or about $2.02 more than just one-year ago(1). So how can fleets mitigate the exploding cost of fuel and softening freight rates(2)? Use per diem compliance tech to unlock fleet savings amid economic uncertainty and record inflation.
An automated telematic solution, like Per Diem Plus®, allows motor carriers to rapidly deploy a solution to realize immediate savings, offset pain at the pump and boost driver pay. Additionally, our cloud-based mobile-enabled platform offers flexible Service Plan Options allowing motor carriers to easily implement an IRS-compliant fleet per diem plan that:
Can be implemented in a single day
Enhances recruiting & retention by raising employee driver take-home pay
Saves a motor carrier thousands of dollars annually per driver
Automates per diem payroll accounting & tax compliance
Eliminates the need to retain ELD backups for 3 years to substantiate per diem
Although Congress temporarily increased the trucker per diem deduction to 100% for 2021 and 2022, there is a common misconception in the industry that at 80% deductibility per diem will not save a motor carrier money. The below tables prove otherwise.
Assumptions
The following analysis assumes 2,500 average weekly miles / driver; $69 per diem; $65,000 annual driver wages; 255 nights away from home; a 12% effective federal income tax rate, and $10/$100 workers' comp rate.
Workers Compensation Savings From Using Per Diem Plus
Twenty-three states are members of the National Council on Compensation Insurance (NCCI), 39 rely on NCCI regulations. Under NCCI rules a motor carrier paying substantiated per diem under an IRS-accountable plan can exclude up to $69/day of per diem from taxable wages, which provides a significant per driver annual savings to a fleet(3).
With growing economic uncertainty and recessionary clouds on the horizon it is not known if Congress will extend the 100% deduction for per diem. However, a motor carrier that implements Per Diem Plus will be in a stronger position to weather the economic storm.
Driver Tax Savings From Per Diem
As of January 1, 2018, employee drivers can no longer claim per diem as an itemized deduction on their federal income tax return. However, motor carriers can offer per diem to employee drivers to recapture the lost tax savings. The average Married over-the-road driver earning $65,000 annually will save approximately $3,457 in federal income taxes equivalent to $0.03 cents per mile.
The average Single over-the-road driver earning $65,000 annually will save approximately $4,485 in federal income taxes equivalent to $0.04 cents per mile.
Fleets can unlock unlock over $2,700 in savings amid economic uncertainty and record inflation, while increasing driver annual take home pay over $4,400.
1 Kingston, John, "Weekly DOE/EIA diesel price decline is biggest since 2008", Freightwaves, July 25, 2022 LINK
2 Achelpohl, Scott, "Survey points to exodus of small operators - and fuel costs as the culprit", FleetOwner, May 23, 2022 LINK
3 North Carolina allows a $75 exemption for per diem Rule 2-B-2 LINK
Copyright 2022 Mark Sullivan Consulting,PLLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®