Why this matters to trucking businesses
Two recent tax developments shape how small carriers, leased-on owner-operators, and medium fleets will plan and file 2025 and 2026 returns. First, Congress made the Qualified Business Income (QBI) deduction permanent as part of the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025—removing the looming sunset at the end of 2025 for pass-throughs like sole proprietorships, partnerships, and S corporations. That permanence protects the up-to-20% deduction on qualifying profits from your trucking operations. The law also introduced a “minimum QBI deduction” of $400 for taxpayers with at least $1,000 of qualifying business income, indexed in future years.
Second, the IRS issued Revenue Procedure 2025-28 implementing new Section 174A: domestic research and experimental (R&E) costs can be immediately deducted for tax years beginning after December 31, 2024, while foreign R&E remains subject to 15-year amortization. For small businesses, the guidance includes pathways to apply these rules retroactively to certain 2022–2024 years. If your fleet has been building proprietary dispatch tools, route-optimization algorithms, or fuel-saving software, these rules can materially change your tax bill.
How QBI works for trucking—and what to check
- Entity type: Most owner-operators and many fleets operate as pass-throughs (sole prop, partnership/LLC, S corp). QBI applies at the owner level, reducing taxable income from the business. Trucking is not a “specified service trade or business,” so the deduction generally isn’t barred by SSTB rules, though standard income, wage, and basis limits still apply.
- W-2 wages and equipment basis (UBIA): Above certain income thresholds, the QBI deduction is limited by the greater of 50% of W‑2 wages or 25% of W‑2 wages plus 2.5% of unadjusted basis immediately after acquisition (UBIA) of qualified property (think tractors, trailers, shop equipment). Review owner-operator S‑corp salaries, company driver payroll, and owned equipment to avoid a haircut from the wage/UBIA limits.
- Aggregation can help: Many fleets hold rolling stock in one entity and operations in another. If your entities share ownership, management, and interdependent activities, an irrevocable aggregation election might let excess wages or UBIA in one business support QBI in another. Get your CPA to model this before filing.
- States differ: Several states decouple from federal QBI. Don’t assume your state return mirrors the federal benefit; check state conformity before setting cash tax budgets.
- New $400 minimum: The OBBBA adds a floor so qualifying taxpayers won’t see QBI collapse to zero in lean years—a small but useful cushion for seasonal or startup fleets.
R&D: More relevant to trucking than you might think
Under Rev. Proc. 2025-28, domestic R&E spending tied to your trade or business can now be currently deducted (or, by election, amortized over at least 60 months). For fleets, qualifying projects may include in‑house dispatch/telematics platforms, dynamic routing engines, driver-app development, predictive maintenance analytics, or yard/terminal automation software. The guidance also provides small‑business paths to apply Section 174A retroactively to certain prior years, potentially unlocking refunds.
- Domestic vs. foreign work: Only U.S. R&E gets immediate expensing; foreign R&E still amortizes over 15 years. Keep vendor scopes and developer locations well documented.
- Coordination with the research credit: The credit rules under Section 41 remain in place; the new procedure explains method changes and elections that interact with the credit and Section 280C. Work with your advisor so deductions and credits don’t work at cross‑purposes.
- Deadlines still in play: If you’re pursuing small‑business retroactive relief, note that certain elections for prior years had 2025 due dates, but there is still a final window for amended returns/AARs through July 6, 2026—talk to your preparer now.
Action checklist before you file
- Model owner wages and driver payroll to optimize the QBI wage/UBIA limitation for 2025 income levels.
- Inventory owned equipment and original cost (UBIA). Consider whether equipment should be owned in the most QBI‑efficient entity before making 2026 acquisitions.
- Evaluate aggregation if you operate multiple commonly owned entities (ops, leasing, brokerage) with shared management and interdependent activities.
- Map 2022–2025 software and analytics spend. If eligible, pursue Section 174A expensing and determine whether retroactive relief could generate refunds.
- Confirm state conformity to QBI and to federal R&E treatment before setting cash tax expectations.
- Document R&D rigorously: project descriptions, hypotheses, testing records, time tracking, and U.S. versus non‑U.S. work locations.
Bottom line for carriers: QBI’s permanence rewards disciplined payroll and capital planning, while the IRS’s new R&D procedures can turn your in‑house tech investments into immediate deductions or refunds. Combine both and you can lower effective tax rates, smooth cash flow, and reinvest in trucks, tech, and drivers in 2026.
Sources Consulted: Wiss & Company Insights; Internal Revenue Service (Internal Revenue Bulletin 2025-38, Rev. Proc. 2025-28); Godfrey & Kahn client alert on the One Big Beautiful Bill Act.
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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.
