Drivers judge your pay by what lands in their bank account, not by what's on the offer letter. That's why a truck driver per diem program comes up in so many recruiting calls. Set up correctly, it raises take-home pay and trims your payroll taxes. Set up badly, it gives the IRS grounds to treat every per diem dollar as taxable wages. Here's what changed for the 2026-27 tax year, how the math works, and how to pitch per diem honestly to the drivers you're trying to hire.
The 2026-27 per diem rates carriers can use
The IRS published its yearly rates in Notice 2026-60. For transportation-industry travel, the meals and incidental expenses (M&IE) rate stays at $80 per day inside the continental U.S. and $86 per day outside it. These rates cover allowances paid for travel on or after October 1, 2026, through September 30, 2027. FreightWaves reported that the trucking rate didn't move, while the general high-low rates went up to $329 for high-cost localities and $230 for everywhere else.
The $80 is a ceiling for what counts as substantiated. It isn't a payment you owe anyone. According to Thomson Reuters' summary of the notice, the amount treated as substantiated is whichever is lower: what you actually paid or the per diem rate. Employees still have to document the time, place and business purpose of each trip.
What makes a per diem plan "accountable"
Per diem stays out of taxable wages only when it's paid under an accountable plan. IRS Publication 463 sets three conditions. The expense needs a business connection. The driver has to account for it within a reasonable time. Any excess has to be returned within a reasonable time. A plan that misses any of the three is nonaccountable, and the payments become ordinary wages.
For fleets, the rule that causes the most trouble is this one. Publication 463 says that if an arrangement reimburses expenses by lowering the pay you report as wages, it's treated as nonaccountable, because the employee would get the full pay with or without the expenses. Simply relabeling part of a driver's existing pay as "per diem" isn't a safe program. Before you change anything, have a payroll tax professional review how your per diem is tied to actual travel.
The trip itself has to qualify too. Publication 463 bases per diem on travel away from the driver's tax home, which generally means work that requires sleep or rest away from home. Local drivers who sleep at home every night usually don't qualify. Departure and return days are partial days: the IRS lets you count 3/4 of the daily rate for those, or use another reasonable method you apply consistently. Your ELD and dispatch records are the documentation that proves which days qualified.
The carrier math: a worked example
The tax savings come from payroll taxes. According to IRS Tax Topic 751, the employer pays 6.2% for Social Security and 1.45% for Medicare, which totals 7.65% of wages. A properly structured per diem isn't subject to either.
Here's an example. Every input below is an assumption, not a benchmark:
- Assumed: one OTR driver who qualifies for $300 per week in per diem, which is below the weekly IRS ceiling for a driver out five full days plus two partial days.
- Assumed: 48 working weeks a year, so $14,400 in per diem per driver.
- Employer FICA you don't pay: $14,400 × 7.65% = about $1,102 per driver per year.
- Assumed: a 20-truck fleet with every seat filled by a qualifying driver, which comes to about $22,032 a year.
There's an offset. Publication 463 caps the deduction for meals connected to DOT hours-of-service work at 80%, not 100%. In this example, $2,880 of each driver's per diem ($14,400 × 20%) wouldn't be deductible. At an assumed 21% marginal income tax rate, that costs roughly $605 per driver. Net it out and the program still saves money, but by a bit under half the headline FICA figure. Run the numbers with your own tax rate before you budget on gross savings.
What per diem means for your drivers
For a driver, the obvious benefit is a bigger paycheck. In our example, $14,400 a year isn't subject to the driver's 7.65% FICA or to income tax withholding. The tradeoff is that per diem dollars aren't Social Security wages. The Social Security Administration calculates retirement benefits from up to 35 years of a worker's indexed earnings. Years with lower reported wages can therefore mean a smaller benefit later. Lower reported income can also matter when a driver applies for a mortgage or a car loan.
Many drivers, especially newer ones, don't know about this tradeoff. A recruiter who explains it up front builds trust. A driver who learns about it from a loan officer six months later starts to wonder what else wasn't explained.
How to use per diem in recruiting without losing trust
- Quote both numbers. Show gross pay and estimated take-home pay, with and without per diem, on a sample settlement. Drivers compare offers line by line.
- Make it optional if you can. Consider letting drivers opt out each year, since drivers who are close to retirement or about to apply for a mortgage may prefer fully taxable pay.
- Explain the qualifying days. Tell drivers which days pay the full amount, which pay a partial amount, and which pay nothing, such as home time or local work. A surprise on the first settlement is a fast way to sour a new hire.
- Don't lead your job ad with per diem. Lead with weekly pay, home time and lanes, and treat per diem as a detail. An ad built around tax savings attracts drivers who are comparing paychecks, not careers.
- Train your recruiters. Give them a one-page script that covers how the program works, the Social Security tradeoff, and where to send tax questions. They shouldn't be giving tax advice.
Audit-proofing the program
Keep per diem calculations tied to ELD and dispatch data rather than a flat weekly amount paid no matter what. Review the plan every October when the new IRS notice comes out, and change the rates in payroll on the effective date. Write the policy down: who qualifies, how partial days are counted, and how excess amounts are returned. If a driver moves to a local or dedicated route where they're home every night, end their per diem eligibility in the same payroll cycle.
Key takeaways
- The IRS transportation M&IE rate for October 2026 through September 2027 is $80 per day in the continental U.S. and $86 outside it.
- Per diem is tax-free only under an accountable plan. Carving it out of existing wages risks reclassification as taxable pay.
- Employer savings are 7.65% FICA on qualifying per diem, minus the cost of the 80% meal deduction limit.
- Be upfront with drivers that per diem lowers their Social Security wages and reported income.
- Back every per diem day with ELD and dispatch records, and review the plan every October.
Getting the right drivers into those seats
A good per diem program helps you compete on take-home pay, but it only pays off when your trucks have drivers in them. If your team is busy running payroll, compliance and dispatch and doesn't have time to source, screen and follow up with CDL-A applicants, outsourcing the recruiting work can keep your seats filled while you focus on running the fleet.
Know a CDL-A driver who wants a better place to drive? Refer them to us. It's free for drivers: Refer a driver.
Photo: born1945 from Hillsboro, Oregon, USA, CC BY-SA 2.0, via Wikimedia Commons.
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