How are truckers taxed? This is one of the most popular questions we ask ourselves from time to time. Understanding the taxes you need to pay as a truck owner or operator will cushion you against various legal obstacles. It will also ensure that your business operates efficiently. Here is the truck drivers guide to taxes:
Self-employment tax is a return filed to the IRS to fund social security and Medicare. It is often submitted by freelancers, contractors, and self-employed individuals. It is pegged at 15.3% of your net income, translating to 12.4% for social security and 2.9% for Medicare. Ideally, this amount is calculated against your trucking and logistics business profits.
Further, you will be subject to an additional 0.9% tax if your income is more than $200,000. This amount suffices if you file as a single person. On the other hand, the extra 0.9% will come up if you file your returns jointly.
State Income Tax
A state income tax is levied by a state or local authorities on its residents. This tax will also affect non-residents who earn significantly from state-sourced income. A trucker will pay this amount to the state within which they operate. Yet, there is no standard payable amount. This figure varies from one state to another.
Sometimes, you might get taxed in your work and home state. This happens if you are an intrastate driver who drives beyond a 100-mile radius of your terminal. You might also need to pay state income tax to multiple states if you do not subscribe to DOT service hours.
Heavy Vehicle Use Tax
The heavy vehicle use tax is a levy imposed on heavy commercial trucks that operate on public highways. These vehicles often weigh at least 55,000 pounds. Usually, the taxable amount is based on the gross weight of your unloaded truck. For this reason, expect the amount to increase with the weight of your vehicle.
Usually, a 55000-pound truck attracts a tax of about $100. You will then pay an extra $22 for every additional 1000 pounds. However, vehicles weighing over 75000 pounds will attract a fixed fee of $550. However, you will be exempted from the HVUT if you travel fewer than 5000 miles annually. It will also happen if you are in the agricultural sector and travel fewer than 7500 miles.
Federal Excise Tax
Every time you purchase a new truck to add to your fleet, you must pay a federal excise tax. How are truckers taxed? This tax accounts for 12% of the total sale price. Remember, this tax is often levied on trucks with a chassis of over 26000 pounds. It could readily increase the cost of the car by up to $30,000.
Are you looking for a trucking service provider? K-Way Express, Inc. is your ultimate partner! We offer exceptional transportation services across Minnesota, addressing a broad scope of needs. Our family-owned business specializes in freight, brokerage, transportation, and warehousing. Call us today via (800)657-0155 or (320)485-2325