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Per diem tax deduction increased following restaurant stimulus measure

A vintage neon restaurant sign along old Route 66.

Owner operators will be able to take advantage of a tax break thanks to a federal stimulus measure designed to help restaurants, according to business services provider ATBS.

In effect for all of tax years 2021 and 2022, the measure allows owner operators to deduct 100% of the cost of restaurant meals while on the road instead of the traditional 80%.

“For example, if you were away from home 300 days in 2021 and purchased all of your meals from restaurants, you could take a meal deduction of $19,800,” said ATBS Tax Manager Michael Schneider, based on $66 per day for 300 days. Under the old formula, at 80%, the deduction would be $15,840. “So, the additional deduction from the new rule is nearly $4,000.”

Schneider said the stimulus program is intended to encourage spending in restaurants to help them recover from business lost to the pandemic lockdowns. ATBS held conversations with the IRS directly to clarify its application to truckers’ per diem.

The IRS agreed to an ATBS suggestion that a filer estimate the percentage of on-the-road meals bought at a restaurant (dine-in and takeout), which would qualify at 100%. The remaining meals, bought at groceries and convenience stores, would qualify at 80%.

“If you are away from home driving for three weeks and eat three meals a day, you would eat 63 total meals.  If you purchased 28 of those meals at a restaurant, then 44% of your meals would be considered purchased at restaurants,” ATBS said. Those qualify for the 100% deduction. The remainder would be at 80%.

As before, the IRS requires records for tax deductions, so owner operators are always advised to keep meal receipts and logs that reflect your days spent away from home.