How Are Detention Pay and Layover Pay Taxed for Owner-Operators?
Detention pay and layover pay are both treated as ordinary taxable income for owner-operators, taxed the same way your regular freight income is — there's no special category or reduced rate for either type of payment.
Detention pay is compensation you receive when you're held up at a shipper or receiver beyond the agreed loading or unloading time, and layover pay compensates you for downtime waiting on a new load assignment. Both represent income you earned through your work as an owner-operator, even though neither involves the truck actually moving, so both get added to your total gross income right alongside your regular freight revenue.
This matters most for two reasons. First, since it's taxable income, it's subject to the same self-employment tax as your regular earnings, so a detention-heavy month can meaningfully increase what you should be setting aside for quarterly taxes. Second, some brokers and shippers report detention or layover pay as separate line items rather than folding it into your regular settlement, which means you need to make sure you're capturing all of it when totaling your income for the year, not just what shows up on a single 1099.
What this means for your recordkeeping:
Detention and layover pay counts toward your gross income for both income tax and self-employment tax
It should be included in your running estimate of what to set aside for quarterly payments
Cross-check your own settlement records against any 1099s you receive to make sure nothing is missing
A common mistake: drivers treat detention and layover pay as a reimbursement rather than income, since it doesn't come from an actual load being hauled, when the IRS treats it exactly the same as freight revenue.
BossTax's free app totals all forms of settlement income automatically, including detention and layover pay, so your quarterly tax estimate reflects your actual full earnings.
Curious whether your quarterly tax number accounts for detention pay correctly? Schedule a free 15-minute chat — no pressure, just answers. Click here.
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