Detention pay and layover fees are common sources of income for truck drivers, but they are often misunderstood from a tax perspective. If you are an owner-operator or a company driver who receives additional compensation for waiting time, it is important to understand how this income is taxed and what expenses you can deduct during waiting periods. A driver who earns $8,000 per year in detention pay could owe an additional $1,200-$2,800 in taxes depending on their tax bracket.
This guide explains the tax treatment of detention pay, layover fees, and other waiting-time compensation for both company drivers and owner-operators. We will cover how to report this income, what deductions and expenses may apply during waiting periods, and strategies to minimize your tax liability.
What Are Detention Pay and Layover Fees?
Detention pay is compensation paid to truck drivers when they are forced to wait beyond their scheduled appointment time at a shipper, receiver, or loading facility. The FMCSA allows drivers to be compensated for detention time, and many carriers pay a detention fee after the first 2 hours of waiting. Layover pay is compensation for required overnight stays away from home that are not part of the normal trip schedule, often due to loading/unloading delays or weather.
For company drivers, these payments are typically included on the driver's settlement statement and added to their regular compensation. For owner-operators, detention and layover fees may be charged directly to the broker or shipper and paid as separate line items. In either case, the IRS treats these payments as taxable income that must be reported on your tax return.
| Payment Type | Typical Rate | Taxable? | Form for Reporting |
|---|---|---|---|
| Detention pay (company driver) | $15-$35/hour | Yes | W-2 (box 1 wages) |
| Detention pay (owner-operator) | $50-$100/hour | Yes | Schedule C (gross receipts) |
| Layover fee (company driver) | $100-$250/night | Yes | W-2 (box 1 wages) |
| Layover fee (owner-operator) | $150-$300/night | Yes | Schedule C (gross receipts) |
| Loading/unloading pay | Varies | Yes | W-2 or Schedule C |
How Detention Pay Is Taxed
Detention pay is taxed as ordinary income, just like your regular wages or business income. For company drivers, detention pay is included in your total wages shown on your W-2 and is subject to federal income tax, Social Security tax, Medicare tax, and applicable state and local taxes. Your employer withholds taxes on this income along with your regular pay.
For owner-operators, detention pay received from brokers or directly from shippers is included in your gross receipts on Schedule C. It is subject to both income tax and self-employment tax (15.3% for 2026). You should track detention and layover payments separately from your regular freight revenue to ensure accurate reporting and to identify any associated expenses.
Deductions Related to Detention and Layover
When you are detained or on layover, you may incur additional expenses that are deductible. For owner-operators, these can include extra meals (deducted at the per diem rate or actual cost), additional lodging if required, and the cost of parking or idling during the waiting period. If you choose to use the per diem method, you can deduct $69 per day (2026 rate) for meals during detention or layover days, as long as you are away from your tax home overnight. See our per diem for truck drivers guide for details.
Pro Tip: If you receive layover pay that specifically covers lodging and meal expenses, those amounts may be considered reimbursements rather than income. However, if your pay is a flat fee without itemized expense reimbursement, the full amount is generally taxable. Always consult with a tax professional about your specific situation, especially if you receive per diem or expense allowances.
Record Keeping for Detention and Layover
Maintaining accurate records of detention and layover events is important for both tax purposes and to ensure you receive proper compensation. Keep copies of your settlement statements showing detention and layover pay. Document the date, time, location, duration, and reason for each detention or layover event. For owner-operators, also keep records of any additional expenses incurred during waiting periods, such as meals, lodging, and parking. These records will substantiate your deductions if the IRS questions them.
Examples of Detention Pay Calculations
Example 1: Company Driver
Carlos is a company driver who earns $0.52 per mile. In 2026, he accumulates 50 hours of detention time at $20/hour, earning $1,000 in detention pay. This $1,000 is included in his W-2 wages and is taxed along with his regular pay. He does not have any additional deductions related to detention because he is a company driver and his meals and lodging are his own responsibility, subject to the per diem rules for all over-the-road drivers.
Example 2: Owner-Operator
Maria is an owner-operator who charges $75/hour for detention time. In 2026, she has 40 hours of detention time, earning $3,000 in detention fees. She also receives $500 in layover fees for two overnight delays. Maria reports all $3,500 as gross receipts on Schedule C. During her detention and layover periods, she incurs $120 in additional meals and $60 in parking fees, which she deducts as business expenses on Schedule C. She is also able to claim the per diem meal deduction for the overnight days.
What If You Are an Employee vs. Independent Contractor?
Your tax treatment of detention and layover pay depends on your employment classification. Company drivers who receive W-2s have taxes withheld on all compensation, including detention and layover pay. They are not subject to self-employment tax and cannot deduct business expenses directly. Owner-operators and independent contractors, by contrast, report all income on Schedule C and can deduct related business expenses. The distinction between employee and independent contractor is critical, and the IRS has specific tests to determine classification. For more on this topic, see our 1099-NEC guide for truck drivers.
Multi-State Considerations
If you receive detention or layover pay while in a state different from your home state, you may have multi-state tax filing obligations. Some states consider the income earned within their borders to be taxable, even if you are only there temporarily for detention. Keeping a log of where each detention and layover event occurred can help your tax preparer determine your state filing requirements. For more on state income tax for interstate truckers, see our dedicated guide.
Frequently Asked Questions
Is detention pay taxed differently than regular pay?
No, detention pay is taxed as ordinary income, the same as your regular wages or business income. It is subject to federal income tax, Social Security, Medicare, and applicable state taxes. There is no special tax rate for detention or layover pay.
Can I deduct expenses during detention time?
Owner-operators can deduct ordinary and necessary expenses incurred during detention or layover periods, such as additional meals, parking fees, and lodging. These are deducted on Schedule C. Company drivers are generally not able to deduct these expenses if they are employees.
Do I need to pay self-employment tax on detention pay?
If you are an owner-operator or independent contractor, yes. Detention and layover pay is included in your net earnings from self-employment and is subject to self-employment tax (15.3% for 2026 on the first $176,100 of combined net earnings). Company drivers do not pay self-employment tax on any wages.
How do I report layover pay on my taxes?
Company drivers report layover pay as part of their W-2 wages. Owner-operators report it as gross receipts on Schedule C, Schedule F, or the appropriate business tax form. You should keep records showing the amount and source of each layover payment.
Can I claim per diem on detention days?
Yes, if you are away from your tax home overnight and meet the IRS substantial sleep or rest rule, you can claim the per diem deduction for detention days, regardless of whether you are actually driving. The per diem rate is the same for any day you are away from home overnight on business.