How much can a trucking company save with a Section 125 plan?

A 100-driver fleet at $50,000 average wage with $3,500 average pre-tax benefit election saves approximately $26,775 per year in employer FICA payroll tax. The math: $350,000 in pre-tax elections times 7.65% FICA equals $26,775. IRC §3111. Per-driver savings scale linearly with fleet size.

Do my drivers save money too?

Yes. Every driver avoids 7.65% FICA on their pre-tax elections, plus federal income tax and state income tax in most states. On a $3,500 election, that is roughly $90 more per paycheck in take-home for each driver, with no change to benefits. For a workforce where every dollar of take-home matters for retention, this is a real counter-offer to poaching carriers.

Will my CPA approve a Section 125 plan?

Almost certainly yes. Section 125 is standard payroll and tax practice. Your CPA either already files it for you (if you have any pre-tax deductions today) or works with the TPA who does. David will talk to your accountant directly to walk through the setup.

For trucking and logistics: pay less in payroll taxes on the benefits you already offer.

Q: Is Section 125 legal for trucking and logistics?

Yes. Section 125 of the Internal Revenue Code (26 U.S.C. §125) has been federal law since 1978. Cafeteria plans are explicitly defined and protected by statute. The law has been amended dozens of times since, never repealed.

A 100-employee company saves $26,775 a year through Section 125. Every employee sees up to $90 more per paycheck. Same benefits, same coverage, less out of your pocket.

Math: 100 employees × $3,500 average pre-tax election × 7.65% FICA = $26,775. IRC §3111.

Get your company's number

See what Section 125 saves your fleet — driver retention without touching rate-per-mile. David reaches out within one business day.

How the math actually works

1
Your team picks pre-tax benefits (health premiums, FSA, HSA, supplemental coverage) through a Section 125 plan you already have or we set up.
2
Those dollars come out of wages before payroll tax is calculated.
3
You and your team both pay 7.65% less in FICA on a smaller wage base. Same benefits land in their pocket. The 7.65% you both used to pay stays in yours.

For a 100-employee trucking and logistics company at $50,000 average wage:

	Without Section 125	With Section 125
Annual wages	$5,000,000	$5,000,000
Pre-tax benefit elections	$0	$350,000
Wages subject to FICA	$5,000,000	$4,650,000
Employer FICA (7.65%)	$382,500	$355,725
Your annual savings	-	$26,775

Your number depends on headcount, average wage, and election size. Connect with David to get yours.

Why this matters for trucking and logistics specifically

Fleet owners feel three pressures most: driver turnover that runs 80-100% annually industry-wide, fuel and insurance costs that keep eating margin, and rate compression from shippers who will not pay more. Section 125 hits all three without writing a new check.

Driver retention without raising your rate-per-mile.

When the carrier across town poaches your driver with a $0.02/mile offer, $90 more on every paycheck through pre-tax benefits is the counter you can offer without changing your rate or eating into your line-haul margin. Same income to them. No margin hit to you.

Fuel and insurance costs squeezing margins. Section 125 is one line item that drops.

Diesel, insurance, tires, regulatory cost. Most of your line items only go up. Section 125 is a rare lever where the math goes the other way. The more premium your team runs pre-tax, the more 7.65% adds up. Premiums went up roughly 14% in 2025. As your premium dollars climb, your FICA savings climb with them.

One less thing for your dispatch + ops team to figure out.

David handles the plan document, nondiscrimination testing, payroll integration with ADP / Paychex / McLeod / fleet payroll systems, and IRS compliance filings. You sign off on the math, he sets it up, your CPA reviews. Your dispatcher stays on dispatch.

Is this actually real?

Section 125 sounds too good to be true. It is real. It has been real since 1978.

It is federal law.

Section 125 of the Internal Revenue Code (26 U.S.C. §125) was enacted by the Revenue Act of 1978. Cafeteria plans are explicitly defined and protected by statute. The law has been amended dozens of times since. Never repealed.

The 7.65% is not negotiable.

IRC §3111 sets the employer payroll-tax rate at 7.65% (6.2% Social Security + 1.45% Medicare). Pre-tax elections reduce the wage base. Lower wage base means lower FICA. Arithmetic, not interpretation.

Have your accountant in the room.

Section 125 is standard payroll and tax practice. Your CPA either already files it for you or works with the TPA who does. Bring them into the conversation with David. He will talk to them too.

About David

David Toves, Licensed Benefits Consultant

Licensed Benefits Consultant | Phoenix, AZ

David Toves is a licensed benefits consultant based in Phoenix. He works with HVAC owners, electrical contractors, plumbers, restaurant operators, trucking fleets, and hotel operators across the country to set up Section 125 cafeteria plans, FSAs, HSAs, and supplemental coverage. The closest thing most owners get to a benefits guy who picks up the phone.

Already know you want to talk? Email David directly at dtoves@tovesfinancial.com

Keep reading

For fleets

Trucking Fleet Operators: Keep Drivers Without Raising Base Pay

Guide

How to Reduce Payroll Taxes Legally in 2026

Comparison

Section 125 vs. Raising Salaries: A Tax Comparison

Run a different kind of business? See all the industries we work with.

Go deeper before you decide

Four short reads for fleet owners, from what driver turnover really costs you to whether a Section 125 plan is worth it for a fleet your size.

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