Tax Credits and Breaks for Transportation Business Owners

January 29, 2025

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Taxes can become a significant cost for transportation business owners, but there are many ways to reduce these bills. This involves being familiar with tax credits and breaks that your freight business may be eligible for.

 

Due to tax code complexity, though, it’s not always easy to determine which ones to use — or even find them in the first place. The following guide includes several tax breaks and credits that are available in the transportation industry.

What is the Difference Between a Tax Break vs. Credit?

These terms may sound similar — but they work in different ways:

  • Breaks or deductions reduce the amount of taxable income your business has
  • Credits lower the amount of tax your company owes dollar-for-dollar

 

For example, a tax credit of $5,000 directly decreases your tax bill by $5,000. A deduction of $5,000 lowers your taxable income by this amount, reducing the amount of taxes you owe.

Tax Breaks (Deductions) That Are Prominent in the Transportation Industry

Several deductions are available to help lower tax bills for transportation businesses. But state laws and other factors can affect eligibility and the amount your company saves if you use these breaks. The following are some of the main types of deductions that transportation business owners use.

Accelerated Depreciation

Trucks and other assets lose value over the years. With accelerated depreciation, businesses are allowed to deduct higher amounts during the early years of these assets. These higher upfront breaks result in lower taxes, helping companies save money sooner rather than later. Note that these deductions decrease in the future, though.

Qualified Business Income Tax Deductions

QBI deductions are part of the Tax Cuts and Jobs Act, but they won’t be around much longer. In fact, they expire at the end of 2025. These breaks allow businesses to deduct a maximum of 20% of QBI — the net amount of income. Note that the IRS has several exceptions that aren’t included in a business’ QBI.

Vehicle and Travel Tax Deductions

Operating a business in the transportation industry involves having trucks or other vehicles do a lot of driving, resulting in high fuel costs and other expenses. Companies have a couple of ways to use these deductions to help reduce tax bills, including:

  • Standard mileage rate that includes the total number of miles driven multiplied by the standard deduction rate
  • Actual car-related expenses, including maintenance, fuel costs, depreciation, insurance, and other expenses

Home Office Tax Deduction

Transportation business owners who have a home office can take advantage of this break to lower taxes. This deduction allows you to deduct a certain dollar amount per square footage or deduct a percentage of the square footage. Several expenses are included with this break, such as utilities, insurance, and supplies.

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Per Diem Allowances

Rather than paying for the cost of employee travel expenses, transportation business owners can use per diem allowances. These cover lodging, meals, and incidentals when employees travel as part of their job. Note that you’ll need to keep records to substantiate when, where, and why employees traveled. The following explains these allowances in more detail.

Lodging

When employees stay in hotels or other accommodations for business purposes, these expenses are typically entirely deductible — as long as they don’t exceed per diem allowances for lodging.

Meals and Incidentals

These expenses include restaurant bills or other meal costs, room service, dry cleaning, tips for services, and certain other costs employees incur while traveling for business. Per diem allowance methods include lodging/meals/incidentals, meals and incidentals only, and just incidentals.

Tax Credits that Apply to the Transportation Industry

Using these credits, if applicable, can help your company lower your tax bill amount. These are some of the more commonly used tax credits in the freight industry.

A man is pumping gas into a truck.

Fuel Tax Credits

With fuel being one of the biggest expenses for transportation companies, this is among the most common types of credit that business owners use. These fuel tax credits help offset the cost of keeping trailers and other vehicles fully fueled. Other kinds of equipment may also qualify for these credits, such as pumps.

Employee Retention Credits

Was your transportation company affected by the COVID-19 pandemic? If so, you may be eligible for these credits. Businesses that were fully or partially closed down due to government orders or businesses that experienced a certain drop in revenue during 2021 may be able to use these credits. Note that the deadline for 2021 ERC claims is April 15, 2025.

Research and Development (R&D) Tax Credit

This credit helps encourage growth in the transportation industry while also helping companies save money on taxes. In order to qualify for this credit, you’ll need to meet certain criteria, such as having a qualified purpose and developing a new or improved process or other component. This credit covers several costs, such as supplies, wages, and testing.

Work Opportunity Tax Credit (WOTC)

Hiring employees from targeted groups can help you make use of this federal credit to reduce taxes owed. Examples of these groups include:

  • Qualified veterans
  • Designated community residents
  • Vocational rehabilitation referrals
  • Supplemental Security Income recipients

 

You’ll need to receive a certification for these workers from your state’s workforce agency to show that they are considered targeted group members. You’ll also need to submit the paperwork for this credit within a certain amount of time after employees begin working for you.

Looking for Tax Reduction Strategies? Get in Touch!

If you’re exploring ways to lower your taxes, having experts at your side can help! At Transportation Tax Consulting, we provide tax services for companies in the freight industry. Whether you need help with airline, trucking, or railroad taxes, our knowledgeable tax professionals can assist you with maximizing your tax return.

 

Ready to get started on reducing your company’s taxes through available federal, state, and local credits and breaks? Schedule a consultation with TTC today!

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Why We Specialize in the Transportation Industry?

June 9, 2025
Why We Specialize in the Transportation Industry At Transportation Tax Consulting LLC, we don’t try to be everything to everyone. We specialize — exclusively — in the transportation industry, because that’s where we know we make a difference. Focused Expertise. Real Results. Transportation companies face some of the most complex tax and compliance requirements in the country — from IFTA and IRP filings to sales and use tax, nexus compliance, audit defense, business licenses, annual reports and statutory agent. These issues aren’t just technical; they’re operational, time-sensitive, and often costly when mishandled. That’s why we’ve chosen this niche. By focusing solely on the transportation sector, we’ve built the depth of knowledge and experience needed to help fleets, carriers, and logistics firms stay compliant, save money, and grow confidently. Why Transportation? It’s essential. Trucking, freight, and passenger transport are the lifeblood of commerce. It’s complex. The rules vary by state and jurisdiction — and change frequently. It’s underserved. Most firms are generalists. We’re not. We understand the pressures of the road and the office. Our clients don’t need theory — they need precise, practical solutions that fit their operations. How We Help Whether you’re dealing with a state audit, launching a new entity, or looking to recover overpaid tax, our team is built to support you at every step. Here’s how we deliver: Deep specialization in transportation tax and regulatory issues Proactive compliance strategies and audit support Revenue recovery through detailed reviews and refund claims Ongoing guidance tailored to your operations and jurisdictions More Than Consulting — A True Partnership At TTC, we believe in building long-term relationships. That means:  Daily communication when needed — not just monthly reports Honest, straightforward advice you can act on Consistency, clarity, and responsiveness in every engagement Looking Ahead The transportation industry is evolving rapidly — with automation, fuel changes, labor challenges, and shifting state policies. Our commitment is to evolve alongside it, so our clients stay not just compliant, but competitive. Your business moves America. We help you keep moving.

Why We Educate the Transportation Industry — and Everyone Around It

By Matthew Bowles • June 9, 2025
At Transportation Tax Consulting LLC , we’re known for helping transportation companies navigate complex tax landscapes. But if you’ve worked with us, you know we do more than just consulting. We educate — intentionally, consistently, and across all levels of the industry. Why? Because when transportation companies, their vendors, and tax authorities all understand how things work, everyone benefits. Mistakes drop. Refunds rise. Audits go smoother. And trust increases across the board. Here’s how — and why — we make education a core part of what we do. Educating the Transportation Industry Our clients — from regional carriers to national fleets — face a web of tax and compliance demands: IFTA, IRP, sales and use tax, nexus, and more. Most didn’t enter the business to become tax experts, and yet that’s often what it feels like they need to be. That’s where we step in. We help teams: Understand why certain filings matter Avoid the most common and costly mistakes Build internal processes that reduce audit exposure Identify refund opportunities hidden in their data  When people understand the “why” behind the rules, they make smarter decisions and gain confidence — not just compliance. Educating Vendors That Support the Industry What many don’t realize is how much transportation companies rely on vendors — accountants, software providers, licensing agents, fuel card companies, and more — to manage tax-related data. But here’s the problem: if a vendor doesn’t understand transportation tax compliance, they can unintentionally create exposure for their client. That’s why we work with vendors to ensure they understand: How their services and data impact IFTA/IRP returns What accuracy and formatting really mean in tax compliance How to align their systems with the operational realities of carriers Our goal is to build a better-connected ecosystem where everyone is working off the same playbook. Educating Tax Authorities Yes — we even work with tax auditors and government agencies . Because sometimes, tax departments apply rules in ways that don’t reflect how transportation actually works. We’ve seen audits go sideways not because the carrier was wrong, but because the auditor didn’t understand cross-border logistics or data limitations. When that happens, we act as a translator — explaining what’s happening on the ground, backing it up with data, and ensuring fairness prevails. It’s not about finger-pointing. It’s about clarity. Education is Our Mission This work isn’t a side project. It’s embedded in our firm’s DNA. We educate through: Client training sessions Vendor briefings State-level discussions Published tools and guides Our popular TTC Quiz , which makes learning fun and relevant Because education isn’t just about avoiding penalties — it’s about strengthening the entire industry. Let’s Keep Raising the Bar We’re proud to be part of an industry that moves the economy forward. And we believe the best way to support it is by ensuring everyone — from dispatchers to auditors — understands how to get things right. If you’re in the transportation world — whether you run a fleet, serve one, or regulate one — we’re here to help you understand and thrive. Let’s get it right. Together.

So You Wanted to Be in the Transportation Industry… and Didn’t Know About the Taxes?

June 5, 2025
Welcome to the ride. It’s fast, it’s profitable, it’s essential—and it’s taxed in more ways than you imagined. The transportation industry is the engine of the American economy. Whether it’s over-the-road trucking, logistics coordination, intermodal shipping, or freight brokerage, this sector moves everything. But once you’ve made your move into the industry, you quickly realize there's a hidden maze you didn’t expect to navigate: The transportation tax system. This blog is for every operator, fleet owner, logistics entrepreneur, or back-office professional who once thought, “It’s just fuel, freight, and invoices, right?” Think again. The Tax Landscape: It’s Not Just Income Tax When you think of taxes, your mind may go straight to federal income tax or perhaps sales tax on purchases. But in transportation, taxes show up under many more names—and across every mile you drive. Here’s a snapshot of what makes tax compliance in this industry so uniquely complex: 1. Fuel Taxes (Federal & State) Trucking companies pay fuel excise taxes every time they fill up—and not all of it is recoverable. If you use fuel for refrigeration units (reefers) or non-highway vehicles, you could be due for a refund … if you know how to apply. 2. IFTA (International Fuel Tax Agreement) IFTA requires tracking miles driven in each state and gallons of fuel purchased—then filing quarterly reports to distribute taxes properly. Mess up IFTA, and you’re asking for penalties or a license suspension. 3. IRP (International Registration Plan) IRP governs your apportioned license plates. It’s not just about buying tags—it’s about reporting miles driven in each state for each truck. Miss a filing, and you might not be able to operate legally. 4. Sales and Use Tax From trailers and tractors to parts and repairs—what’s taxable changes from state to state. Some items may be exempt under resale or rolling stock rules. Others might be over-taxed by mistake. Sales tax audits in transportation are brutal if your records aren’t clean. 5. Heavy Vehicle Use Tax (HVUT – IRS Form 2290) If your truck is over 55,000 pounds, you must pay HVUT annually. File it late, and you can’t renew your tags. Don’t file at all, and the IRS will find you. 6. Nexus and Multi-State Exposure With remote dispatchers, out-of-state drivers, or leased equipment, your company could have tax obligations in states you didn’t know about . That’s called nexus , and states are eager to enforce it. 7. Exemption Certificates & Tax Settings If you sell services or lease equipment, issuing the right resale or exemption certificate is critical. One wrong form, and you might owe sales tax you thought the buyer was handling. Why It’s So Complicated Unlike retail or tech industries, transportation crosses boundaries every day —literally and legally. You operate in multiple jurisdictions, buy and sell in different tax environments, and face federal, state, and sometimes even local compliance requirements . Each layer brings new filing deadlines, documentation standards, refund opportunities, and audit exposure. How to Survive (and Thrive) in Transportation Tax If you’re starting out—or even scaling up—here are a few tips to keep you ahead of the tax curve: Invest in Back-Office Support Having the right partner, whether internal or external, can mean the difference between audit peace or penalty chaos. Transportation Tax Consulting firms specialize in these rules—and can save you thousands. Use Technology to Track the Right Data Your dispatch, fuel, and accounting systems should talk to each other. Accurate mileage, fuel, and invoice data are critical to every tax form you’ll file. Don’t Leave Refunds on the Table If you’re not reviewing your sales tax overpayments or filing for fuel tax refunds, you’re giving away profit. Review Your Nexus Footprint Annually Even if you haven’t “set up shop” in a new state, hiring a remote employee or making regular deliveries may create tax obligations. Final Thoughts: Taxes Are a Cost… But They Don’t Have to Be a Surprise So yes—you wanted to be in the transportation industry. Maybe you were excited about freight rates, dispatch lanes, or your first truck purchase. Taxes probably weren’t on your radar. But now you know better. And that knowledge? That’s the difference between just operating—and building something sustainable. Need help untangling your transportation tax opportunities or exposure? Transportation Tax Consulting LLC specializes in helping carriers, brokers, and logistics operators simplify compliance, uncover refunds, and sleep better at night.