2026 tax year
Freight broker taxes and deductions
What you pay carriers passes through your books and it is most of what you bill. A brokerage turning over millions can be running on a margin of a few per cent, and the gross figure misleads lenders, tax authorities and sometimes the broker.
The surety bond required for authority is an ordinary deductible cost, as is contingent cargo cover. Factoring fees, where you sell receivables to fund carrier payments, are deductible in full. Brokerage owns no trucks, so there is very little depreciation here and almost the entire return is operating costs.
The rest of the freight broker deduction list
Ordinary and necessary business expenses, deductible in full in the year you pay them, provided they are genuinely for the business:
- Carrier payments
- Surety bond
- Liability insurance
- Transport management software
- Staff wages
- Marketing
- Factoring fees
- Licensing fees state
Worth knowing
Carrier payments run through your books at close to the value of the freight, so gross receipts look nothing like the margin.
That is what is specific to this trade. The larger deductions are the universal ones, see the full checklist.
What each deduction is worth to you
On $100,000 of profit with no state income tax, $1,000 deducted saves $305, 30.5%, because it comes off self-employment tax and income tax together:
| Net profit | Saved per $1,000 deducted | Effective |
|---|---|---|
| $40,000 | $231 | 23.1% |
| $100,000 | $305 | 30.5% |
| $200,000 | $297 | 29.7% |
The last row is worth less than the one above it, and that is not a mistake: past the Social Security wage base the self-employment part of the saving drops from 15.3% to 2.9%, and the higher income-tax bracket does not quite make up the difference. A deduction is worth most in the middle.
Add a state income tax and every row rises. The 1099 calculator applies that layer.
What these words mean
- Depreciation
- Spreading the cost of something long-lasting, a vehicle, a camera, a tractor, across the years you use it, rather than deducting it all at once.
- Gross receipts
- Everything the business took in, before subtracting any costs. A tax on gross receipts is owed even by a business making a loss, which is what makes it different from a tax on profit.
Related
- Full deductions checklist
- Every profession
- 1099 taxes by state
- Quarterly payments
- Is an S-corp worth it?
- Local income tax
General information about how these deductions work, not tax advice. Whether a particular expense is deductible for you depends on facts this page does not have, check with a tax professional before claiming anything listed here.