What is per diem?

One of the preferred ways many drivers keep a portion of their money is through a system called per diem. This is a funding formula that helps drivers with some of their costs while on the road.

While they usually do have to sleep in their trucks, utilizing their per diem rates can help supplement the costs of meals, tips, and any related expenses, provided certain conditions are met.

The minimum figure for per diem pay is adjusted every year, and may also differ whether you work for yourself as an owner-operator or for a company. Rates also may vary if you’re driving in the U.S. or Canada. Driving regularly to some higher-cost communities may also lead to a higher per diem rate.

For 2025, the base figure in the U.S. increased from 80 percent of $69 per day to 80 percent of $80 per day. Companies do have the discretion to offer more, which could be an incentive in competitive workplaces, in areas with higher prices, or other special circumstances.

To qualify for per diem rates, a driver must be at least 50 miles from home each day, drive a heavy-duty commercial vehicle, and be paid per mile.

If a driver only drives for half a day, instead of a full day, they are also allowed to use half a day’s per diem.

Advantages of per diem

If your trucking company provides you with the option of per diem, it could lower your overall taxable income which means you’ll likely pay less money to the government each year when you file your income taxes.

Utilizing per diem rates also makes things easier for bookkeepers and fleet managers – it’s simpler to calculate a flat per diem rate for each driver when they’re on the road rather than trying to total the small, variable expenses every day for each driver. (Hang onto your receipts, though!)

Per diem also provides drivers with the ability and freedom to try different places and different meals while traveling since it’s up to them where to spend their money each day. Per diem can certainly add to the enjoyment of the job rather than relying on the same budget-friendly establishments or bringing food from home.

Disadvantages of per diem

Although the idea of per diem can be appealing to most drivers, there are some reasons and circumstances where it may not be the best use of your money and time.

An employer may be able to offer a traditional W-2 instead, requiring each driver to be responsible for their own dining and related costs, without any standard per diem deductions. Retirement savings. If your employer offers a 401K plan, your regular contributions may be smaller overall if you have less income each pay period. This could make your retirement financial goals a little smaller or take longer to reach the level you’re hoping for.

• Lending challenges. If you’re applying for a loan, such as for a home mortgage or a vehicle, the lender will look at your taxable income and other financial information. Lower income on paper could potentially reduce your buying power and perhaps reduce the possibility of approval.
• Possible tax liability. Though per diem may mean more money in your pocket and less income to report overall, some states may ask you to pay more, especially if you have other income.
• Complexity. If you prefer to just drive, you might want to leave financial matters to others, especially regarding different tax structures.
• Flexibility. Per diem rates may change at the company level and at the government level on a regular basis, so it can sometimes be difficult to keep up with updates.

Drivers who receive a daily rate instead of by miles driven, are in training, or typically don’t travel more than 50 miles at a time, usually aren’t eligible for regular per diem rates.

Because the pros and cons of utilizing per diem can be complex and may vary by individual situations and circumstances, consider talking with your company’s business manager who can discuss current policies. A financial representative or tax professional familiar with transportation matters can also discuss which option may work best for you.