How Truck Driver State Taxes Work

Content provided for general information. Talk to your tax advisor to confirm the details for your specific situation before taking action.

The rules for truck driver state taxes depend on how you’re employed and what type of driving you do.

Employee Truck Driver State Taxes

The rules for an employee truck driver are fairly simple. Under 49 U.S.C. § 14503, a truck driver who is an employee who regularly drives in 2 or more states is only subject to income taxes in his home state.

That’s different from other types of jobs like travel nurses that have to pay taxes based on where they’re currently working.

So as a general rule, if you’re an OTR trucker or regional trucker, you only have to pay taxes to the state you live in. You don’t have to pay taxes to the state you drive in.

Intrastate truckers could have to pay taxes to two states. A common situation is if you live in one state but drive in a neighboring state.

If you’re only driving in one state, you don’t meet the two-state rule. You may owe taxes to the state you live in and the state you drive in. This works just like any other job where an employee commutes across state lines.

Owner-Operator Truck Driver State Taxes

The rules for an owner-operator or other truck company owner are much more complicated. You’ll probably want to talk to a tax accountant to make sure you’re setting everything up correctly.

States can tax businesses with a nexus in the state. A nexus is a tax term for having activities in that state. Nexus can include pickups, deliveries, or even driving through.

For example, some states will say that if you drive through them for 100 miles on a 1,000-mile trip, you owe them taxes on 10% of your income for that trip.

Some states only tax you after you make a minimum number of trips through that state or if you have customers in that state.

Most of the time, you’ll end up dividing your mileage in each state by your total mileage to determine the percent of your income that you pay taxes on to each state.

Can you make yourself an employee of your trucking company to get the personal tax exemption and write your wages off of your business income? Maybe.

Again, this area is complicated. I recommend that you talk to an in-person tax accountant who specializes in truckers at least for your first year.

After that, use tax and accounting software specifically designed for truckers that tracks the nexus rules. (Make sure it’s not general accounting software that says it helps truckers but leaves you to do the hard part of figuring out all the tax rules.)


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