How does Deprecation Work? And How Can I Save Money? Depreciation for Cross Country Truckers
- Kimi Witherell
- Nov 15
- 4 min read
Running your own truck is more than getting from point A to point B. Every mile you drive comes with costs, and some of the biggest costs are not fuel, tolls, or repairs. The largest long-term expense in your business is depreciation.
Depreciation is the gradual loss in value of your truck, trailer, and major equipment over time. For tax purposes, depreciation lets you deduct part of those costs every year so your taxable income is lower. When used correctly, depreciation becomes a powerful tool that helps you keep more of your hard-earned money.
This guide breaks down depreciation in a way that fits the real world of trucking. You will learn what it is, how it works, and how to calculate it for items like your truck and your tires. You will also see how a bookkeeper can help you reduce your tax bill by making sure depreciation is recorded the right way every year.
What Depreciation Actually Means
Depreciation spreads the cost of an asset across the number of years you use it. Instead of deducting the full purchase cost in one year, you deduct a portion each year. This matches your cost with the income the equipment helps you earn.
In trucking, the most common assets that depreciate are:
Tractor
Trailer
Tires
APU
Major repairs and rebuilds
Computers and log devices
Tools and shop equipment
The IRS assigns a useful life for tax purposes. Most truck tractors and trailers fall under five-year property. Some equipment falls under three-year property.
You do not need to memorise the IRS rules. You only need to understand the logic: depreciation lowers your taxable income by recognising wear and tear.
Straight Line Depreciation Explained
Truck drivers often use two methods of depreciation.
Straight line
Accelerated depreciation, such as Section 179 or the Modified Accelerated Cost Recovery System
To keep this article clear, we start with a straight line. This method spreads the cost evenly across each year of the asset’s useful life.
Equation for Straight Line Depreciation
Depreciation each year = (Cost of asset minus salvage value) divided by useful life
Where:
Cost of asset = what you paid
Salvage value = what you expect to sell it for at the end of its life
Useful life = number of years the IRS assigns
Example One: Depreciation for a Truck
Assume:
Cost of truck: $140,000
Useful life: 5 years
Salvage value: $30,000
Step One: Cost minus salvage value $140,000 minus $30,000 = $110,000
Step Two: Spread over useful life $110,000 divided by 5 = $22,000 per year
Your annual depreciation deduction: $22,000
This means you can subtract $22,000 from your taxable income every year for 5 years.
Example Two: Depreciating Tires
Tires wear out much faster than the truck. Many drivers replace their sets every 12 to 24 months, depending on miles and conditions. Although tires are technically an expense and not a long-term asset, some drivers prefer to treat large sets of tires as assets and depreciate them if they want predictable deductions.
Assume you buy a full set of tires:
Cost of tires: $6,800
Useful life: 1.5 years
Salvage value: zero
Depreciation each year = cost divided by useful life $6800 divided by 1.5 = $4,533 per year
If you prefer to keep it simple, you can expense tires immediately, but this example shows how depreciation can smooth your deductions across the year.
Example Three: APU Depreciation
Assume:
Cost: $10,000
Useful life: 3 years
Salvage value: $500
Step One: $10,000 minus $500 = $9,500
Step Two: $9,500 divided by 3 = $3,166 per year
Your deduction for the APU is $3,166 per year.
Accelerated Depreciation for Trucking
Many truck drivers prefer Section 179 or bonus depreciation to write off a large portion of their truck cost in year one. This can dramatically lower your tax bill, but it must be planned carefully.
Simplified example
Cost of truck: $14,0000
If you use Section 179, you may be able to deduct the entire $14,0000 in the first year, depending on your tax position and income.
This is powerful, but it can hurt you later if you have no depreciation left to claim in future years. A bookkeeper can help you pick the best method for your situation.
How Depreciation Saves Money
Depreciation reduces your taxable income. The amount of money you save depends on your tax bracket.
Example including savings
Assume:
Your annual net income before depreciation is $120,000
Your tax rate, including federal and state, is around 22%
Your truck depreciation is $22,000 per year
Step One: Lower your taxable income
$120,000 minus $22,000 = $98,000 taxable income
Step Two: Calculate tax savings
Savings = depreciation multiplied by tax rate $22,000 times 0.22 = $4,840 saved in taxes
You save about $4,840 per year from truck depreciation alone.
Now add tires and equipment:
Tires depreciation: $4,533
APU depreciation: $3,166
Total depreciation: $22,000 plus $4,533 plus $3,166 = $29,699
Total savings = $29,699 multiplied by 0.22 = $6,533
You save $6,533 in taxes by using depreciation correctly.
How a Bookkeeper Helps Truck Drivers Save Money
A professional bookkeeper ensures you do not overpay taxes. They track depreciation every month, record equipment purchases correctly, and choose the method that saves you the most money without creating future problems. For truck hauliers, this includes:
Tracking miles and maintenance
Recording truck loans and interest
Setting up depreciation schedules for trucks, trailers, tires, and equipment
Advising on Section 179 versus straight line
Preventing missed deductions
Preparing numbers for your CPA or tax preparer
Example of money saved by working with a bookkeeper
Assume a truck driver has:
Truck depreciation: $22,000
Other equipment depreciation: $7,699
Total potential depreciation: $29,699
A bookkeeper ensures all of it is applied correctly.
Without a bookkeeper, many sole proprietors only deduct the truck and forget the other items. They may only claim the $22,000 and miss the additional $7,699.
Missed deduction: $7,699Tax rate: 22%
Tax overpaid: $7,699 multiplied by 0.22 = $1,693
By recording depreciation correctly, a bookkeeper saves the driver $1,693 in unnecessary taxes.
In total, many drivers save between $5,000 and $10,000 per year simply by applying depreciation correctly and tracking every eligible asset.
Benchmark Ledger Solutions works exclusively with businesses that generate under $1 million in revenue. If you exceed that threshold, we have excellent partners who can assist you with your accounting and bookkeeping needs. 👍