Hotshot Trucking Taxes – Deductions That Save You Thousands

Hotshot Trucking Taxes: What to Deduct and How to Save Thousands

Taxes are the expense most new hotshot operators ignore until April â€” then they owe the IRS $10,000 they don’t have. Don’t be that guy. Understanding your deductions can save you thousands every year.

How You’re Taxed as an Owner-Operator

As a self-employed hotshot trucker, you pay:

Federal income tax: Based on your net profit (income minus expenses)
Self-employment tax: 15.3% on net profit (Social Security + Medicare)
State income tax: Varies by state. Texas has NO state income tax â€” big advantage

The self-employment tax alone is 15.3%. That’s why deductions matter so much â€” every dollar you deduct saves you roughly $0.30-0.40 in combined taxes.

Every Deduction You Can Claim

Vehicle Expenses

Fuel (your biggest deduction)
Truck payments (interest portion, or depreciation if purchased)
Insurance premiums
Maintenance and repairs
Tires
Oil changes
DEF fluid
Truck washes
Registration and licensing fees

Trailer Expenses

Trailer payment or lease
Trailer maintenance (bearings, brakes, tires, lights)
Straps, chains, tarps, and securement equipment

Business Operations

Load board subscriptions (DAT, Truckstop, etc.)
Dispatcher fees
Factoring fees
ELD/GPS subscriptions
Cell phone (business use percentage)
Dash cam equipment
Permits (IFTA, IRP, UCR, oversize)
USDOT and MC authority fees
BOC-3 filing fees
Drug testing and medical exams
Safety equipment (vest, hard hat, fire extinguisher)

Travel and Meals

Per diem deduction: The IRS allows truck drivers to deduct $69/day (2024 rate) for meals while on the road. This adds up fast â€” 200 days on the road = $13,800 deduction
Hotel/motel stays when required for delivery
Parking fees
Tolls
Scales and weigh station fees

Home Office

If you do your dispatching, bookkeeping, and business planning from home (which you probably do), you can deduct a portion of your rent/mortgage, utilities, and internet based on the square footage used for business.

Depreciation

Your truck and trailer lose value every year. The IRS lets you write off that depreciation. Under Section 179, you may be able to deduct the entire purchase price of your truck and trailer in year one â€” potentially $50,000-80,000+ in deductions.

Quarterly Estimated Taxes

The IRS expects self-employed people to pay taxes quarterly, not annually. Due dates:

Q1: April 15
Q2: June 15
Q3: September 15
Q4: January 15

Miss these and you’ll owe penalties and interest on top of your taxes.

How Much to Set Aside

A safe rule: set aside 25-30% of your net profit (gross income minus expenses) for taxes. Put it in a separate bank account and don’t touch it.

LLC vs Sole Proprietor

Most new hotshot operators start as sole proprietors. It’s simpler and cheaper. Consider forming an LLC when:

You’re making consistent profit ($50,000+ net annually)
You want liability protection
You want to elect S-Corp status to reduce self-employment tax

An S-Corp election can save you $3,000-8,000+ per year in self-employment taxes once you’re profitable. Talk to a CPA when you hit that level.

Record Keeping

Keep receipts for EVERYTHING. The IRS can audit you up to 3 years back (6 years if they suspect underreporting). Use an app or spreadsheet to track:

Every fuel purchase
Every maintenance expense
Every load with rate and miles
Every business expense with date and amount

Bottom Line

The difference between a trucker who pays $15,000 in taxes and one who pays $5,000 on the same income is deductions and planning. Track everything, deduct everything legal, pay quarterly, and get a CPA who knows trucking. The money you spend on a good accountant saves multiples in tax savings.