New Tax Laws Offer Interesting Possibilities
May 9, 2018, 12:27pm
President Donald Trump’s “Tax Cuts and Jobs Act” is receiving a lot of praise. These changes are considered part of the biggest overhaul of the tax system for truck drivers in decades. According to Transportation Attorneys Scopelitis, Garvin, Light, Hanson & Feary, the changes in the tax system, which are intended to help businesses and spur economic growth, are permanent. One of those changes includes a reduction in the corporate tax rate from 35% to 21%.
Changes impacting individual taxpayers, however, are temporary. Those changes include a reduction of the top individual tax rate from 39.6% to 37%. In addition, standard deductions are being doubled ($12,000 for individuals and $24,000 for married taxpayers filing jointly). President Trump is also eliminating miscellaneous itemized deductions for employee taxpayers and doubling the tax credit for children, from $1,000 to $2,000. According to TaxFoundation.Org, the majority of individual income tax changes expire on December 31, 2025.” (https://taxfoundation.org/final-tax-cuts-and-jobs-act-details-analysis/)
For equipment acquired and placed into service after Sept. 27, 2017, taxpayers are allowed to write-off 100% of the cost---thanks to revised bonus depreciation rules. The new Act, however, also limits like-kind exchanges, which was previously used by transportation companies to defer capital gains on equipment sales.
In a recent article by Transport Topics, it is said that one of the most important changes for company drivers is that they are no longer able to deduct miscellaneous expenses. They can now, however, place a greater emphasis on per-diem pay to offset losing those expenses. Currently pegged at $63 per day, a driver under the new tax plan, working 300 days, would receive $18,900 in tax-free per diem.
New changes will allow trucking companies to pay their drivers a nontaxable per diem and get a business deduction for it. Under this new law, Owner Operators will continue to be able to take a per diem while they are away from home.
Overall, it is important that trucking companies start offering accountable per diem plans. According to an online article by Andrew Bollman, an expert in tax reform, those plans "must ensure per diems only cover business expenses. Those expenses must also be substantiated in a reasonable amount of time."
"We are extremely familiar with per diem programs because we've offered per diem to our drivers for over 20 years," said Ethan Zeimet, Director of Finace at Millis Transfer. "We made necessary adjustments based on the new tax laws, so that our drivers continue to receive maximum benefits from our program. As a company, it is extremely important to us to make our drivers' lives on the road as comfortable as possible. We will continue to offer per diem and work to maximize our drivers' take home pay and tax returns."
As new tax rules are implemented throughout the industry, Millis Transfer will continue looking at compensation and per diem plans that help drivers to receive maximum benefit from tax law changes.
About Millis Transfer
Millis Transfer, Getting It There Since 1936, has an impressive service record earning dozens of “Carrier of the Year” awards. Headquartered in Black River Falls, Wis., Millis' top driver earned $116,000 in 2017 and the company raised driver pay again in May 2018. Extra perks for Millis drivers include a maximum pay rate of 58cpm, beautiful and well-maintained equipment outfitted with DirecTv and Sirius radio, and a long list of amenities and benefits. Maintenance facilities and drop yards are strategically located throughout the company’s operating area. Its sister company, Millis Training Institute, offers five school locations that provide students with quality training in order to earn their CDL-A license. For more information, please visit www.millistransfer.com, www.mtidriving.com or call 1-800-937-0880.