Carriers will likely be some of the larger beneficiaries of the tax reform bill in the works in Congress, as the bill sets a new 21 percent corporate tax rate, down from the current 35 percent rate.
“Trucking companies will see a huge benefit at year’s end when they file their 2018 tax returns,” says Atlanta-based CPA Dennis Bridges, head of the eTruckerTax firm. “One of the things [lawmakers] hope companies use that for is as a growth mechanism and to increase compensation to their people.”
Ultimately, though, Bridges says the bill “offers a little something for everybody.”
“Whether they’re a driver, whether they’re an owner-operator with one or two trucks — or [a fleet with] 50 trucks or 300 trucks — it’s going to affect almost everyone.”
Given that the bill lowers corporate tax rates, carriers would be wise to defer any new revenue until after January. It will be taxed at a lower rate then than if accrued in December. Carriers should also try to maximize necessary expenses before year’s end, since the deductions allotted by those expenses will cut carriers’ tax bill more this year than next. “You’re going to get much more benefit from [those expenses this year] than if you wait even until January,” says Bridges. “So if somebody needs a new transmission or a new set of tires, they’re going to be significantly better off to get those now and take the deduction for 2017.”
The Tax Cuts and Jobs Act bill, which passed the Senate late Tuesday and is expected to be voted on by the House on Wednesday, slashes income tax rates across the board for individuals and cuts the corporate tax rate from 35 percent to 21 percent. President Trump, who’s stumped for the bill’s passage, is expected the sign the bill into law shortly after Congress approves it. (Update: The bill has passed both chambers of Congress and has been sent to President Trump to sign.)
Notably for drivers, the bill is expected to be the end of the daily $63 per diem deduction allotted to truck drivers for on-road meal expenses, says ATBS president and CEO Todd Amen. However, he and his firm are still reviewing the details of the bill, he says, and expect to be able to speak more authoritatively in the new year about the changes it institutes.
