Tax basics for NEMT owners: vehicle deductions, payroll taxes, and estimated payments

The federal taxes a NEMT company deals with

On the federal side, a NEMT company files the returns every small business files. The difference is the fleet: the vans carry most of the deductions and most of the record-keeping. Four taxes cover nearly everything:

• Income tax on profit. A sole owner reports it on Schedule C with Form 1040. Partnerships and S corporations pass profit to the owners’ returns. A C corporation pays tax itself. The LLC guide covers how each structure is taxed.
• Self-employment tax. Owners who run the company alone or as partners pay a combined 15.3 percent (Social Security 12.4, Medicare 2.9). It is figured on 92.35 percent of net profit, and it applies once that figure reaches $400. No Social Security portion is due on earnings above the 2026 wage base of $184,500, and any wages you earn elsewhere count toward that base.
• Payroll taxes. Once you hire drivers as employees, you withhold their taxes, add your matching share, and deposit both on a schedule.
• Estimated tax. Nobody withholds tax from an owner’s profit, so owners generally pay it in four installments during the year.

States layer their own income, withholding, and unemployment taxes on top. The figures below are federal and cover the 2026 tax year (returns filed in 2027). Treat this page as a checklist for the conversation with your tax preparer.

Deducting your vans: two methods

Each van is deducted by one of two methods. The standard mileage rate multiplies business miles by a flat IRS figure. Actual costs means adding up fuel, repairs, tires, oil, insurance, registration, and depreciation or lease payments. With the mileage rate you cannot also deduct those operating costs. Business parking and tolls stay deductible, and self-employed owners can also write off the business portion of interest on a van loan.

For 2026 the business rate changed mid-year:

The increase came in Announcement 2026-11, which the IRS tied to rising fuel prices. Miles before July keep the old rate, so total your log in two halves.

Which method a van can use

The rules in IRS Publication 463 decide this before your preference does.

The first-year rule matters most. If you might want the mileage rate for a van, choose it on the first return that includes the van. Picking actual costs with fast depreciation in year one closes the door for good.

Which miles count

Business miles cover the empty run out to the first rider, each loaded leg, the gaps between rides, and the trip back to your lot. Payers generally do not pay for these deadhead miles, but they are still deductible. Publication 463 treats driving from home to your main workplace as commuting. Making business calls during that drive does not change the answer. There is one exception: when the company’s principal place of business is your home, driving from home to another work site for the business is deductible.

Buying a van: how the write-off works

When you choose actual costs, the purchase price comes back to you through depreciation. Under IRS Publication 946, a van in paid passenger service gets friendlier depreciation rules than a family car in most respects.

The same van, deducted two ways

Here is an example: a used wheelchair minivan bought for $48,000 and placed in service in 2026, used only for business. The price is illustrative, and the percentages are the five-year, half-year rates from IRS Publication 946.

Both columns deduct the same $48,000. The difference is timing. Writing it all off in 2026 helps most in a high-profit year and leaves nothing for later years, when profit may be higher. Selling the van has a cost too: gain on a depreciated van is generally taxed as ordinary income, up to the depreciation already claimed. An election out of special depreciation covers every asset in that property class placed in service that year, so plan the choice with your preparer. If you are weighing a lease instead, see leasing vs buying a NEMT van, and for purchase prices see wheelchair van cost.

Payroll taxes once you hire drivers

Employee drivers add a set of taxes you collect, match, deposit, and report. The 2026 figures from IRS Publication 15:

When to deposit and file

1. Know your deposit schedule. In its first calendar year every new employer deposits monthly, so taxes on wages paid in May are due June 15. From the second year, the lookback period sets the schedule: $50,000 or less of reported taxes keeps you monthly, and more than $50,000 moves you to semiweekly.
2. Deposit electronically. All federal tax deposits must be made by electronic funds transfer, through EFTPS, IRS Direct Pay, or your IRS business tax account. All three are free.
3. File Form 941 each quarter. The return for January to March is due April 30, and each later quarter’s return is due at the end of the month after that quarter closes, through January 31 for October to December.
4. Deposit FUTA when the amount owed for a quarter is over $500. Smaller amounts carry forward to the next quarter.
5. Send W-2s and file Form 940 by January 31. For 2026 wages that deadline becomes February 1, 2027, because a due date on a weekend shifts to the following business day.
6. Report each new hire to your state’s new hire registry.

Do not borrow from payroll taxes to cover fuel or a slow broker payment. The IRS calls money withheld from paychecks trust fund taxes, because it belongs to the employees and the Treasury, not the company. When it is not paid over, the penalty equals the full unpaid amount and can be charged personally to anyone responsible who willfully let it slide, including a check signer. The cash flow guide covers building a reserve so it never comes to that.

Paying contract drivers

Contractors are paid without withholding, but they still create a filing. Starting with 2026 payments, each contractor who receives $2,000 or more from you in a calendar year gets a Form 1099-NEC. The filing deadline is January 31, which for 2026 payments means February 1, 2027. The IRS may index the $2,000 floor for inflation from 2027. Get a signed Form W-9 with the contractor’s taxpayer ID before you pay them.

The bigger question is whether your drivers are contractors at all. Under Publication 15, a driver is generally your employee when you have the right to direct both the work and the way it is done, no matter what the job is called. NEMT drivers: 1099 or W-2 walks through the tests.

Estimated tax payments for owners

If you are taxed as an individual (a sole owner, a partner, or an S corporation shareholder), you generally owe estimated payments once you expect a balance of $1,000 or more at filing time. For a C corporation the trigger is $500.

The fourth installment becomes optional if the 2026 return is filed, and the balance paid, by January 31, 2027.

How much to pay. Publication 505 offers a safe harbor from the underpayment penalty: cover at least 90 percent of the current year’s tax or all of the prior year’s tax, whichever is less. That prior-year figure rises to 110 percent when 2025 AGI topped $150,000, or $75,000 for a married person filing a separate return.

When broker money arrives unevenly. Equal quarterly payments assume steady income. If a large catch-up payment or a new contract lands late in the year, the annualized income installment method on Form 2210 can match your payments to when you earned the money. A simple habit makes any method easier: move a set share of every payer deposit into a separate tax savings account the day it arrives.

Records that back up every deduction

Vehicle deductions are the first thing an examiner checks, so the records matter as much as the method.

• Mileage. For a vehicle, Publication 463 wants four things on file: what the van and its improvements cost, when business use started, the miles for each business use, and total miles for the year. Entries written when the trip happens, or soon after, carry the most weight, and a weekly log counts as timely. A round trip or an uninterrupted run of business stops can go in a single record.
• Odometer readings. Log each van’s odometer when a shift begins and again when it ends. Trip logs capture loaded miles, and the odometer catches everything between trips. A mileage log keeps both in one place.
• Van files. Keep the bill of sale, the placed-in-service date, and invoices for any ramp, lift, or conversion work. Publication 583 ties property records to the year you get rid of the vehicle: keep them until that year’s limitation period expires.
• Payroll. Hold employment tax records four years or more.
• Everything else. Most income and expense records need to be kept at least three years after filing, and longer in some cases.

The bookkeeping guide sets up accounts so these totals come straight out of your books at year-end.

Where software helps at tax time

The strongest mileage record is one made during the trip itself. HealthRide logs GPS-recorded miles for each ride, timestamps the pickup and the drop-off, captures signatures on screen, and exports the trip log to CSV or PDF. Timecards and driver hours export too, so year-end totals come from the same records as the day’s work. Both live in reports.