In the gig economy, companies like Uber, Lyft, Instacart, Grubhub, and DoorDash have created flexible earning opportunities for independent contractors. As a delivery or rideshare app driver, you are considered a self-employed independent contractor. That means you’re eligible for tax deductions for rideshare drivers and delivery drivers that can help reduce your taxable income and overall liability. Here is a list of important business expenses rideshare and delivery drivers can write off when filing their income tax return.
Mileage deduction for rideshare drivers
One of the most valuable tax deductions, as a rideshare driver is the mileage deduction, which allows you to deduct eligible business miles driven while providing rides or making deliveries. If you use the standard mileage rate, you’ll deduct $0.725 per mile for business miles driven from January 1 through June 30, 2026, and $0.76 per mile for business miles driven from July 1 through December 31, 2026. If you use the actual expense method to calculate the deduction, you’ll add up all your vehicle-related costs and deduct a percentage that corresponds to the business use of the vehicle. For example, if you drove your vehicle a total of 10,000 miles in a year and 5,000 were business miles, 50% of your vehicle was used for business. You would use this percentage to determine what portion of an expense was for business use.
Vehicle-related deductions
If you choose the actual expense method, you may be able to deduct the business-use portion of several vehicle-related costs. The amount you can deduct is generally based on the percentage of miles driven for business purposes, including:
- Fuel – Deduct the business-use portion of your gasoline and fuel expenses.
- Maintenance expenses – This includes oil changes, tires, inspections, brakes, and other costs that keep your vehicle in good running condition.
- Auto insurance – Deduct the portion of your insurance costs that corresponds to your business use of the vehicle.
- Vehicle depreciation – You may be able to deduct the decline in value of your vehicle over time based on its business use.
- Registration expenses – A portion of your registration fees may be deductible, depending on your state’s rules and how the fees are calculated.
- Car loan interest – If you financed your vehicle, you may be able to deduct the business-use portion of the interest paid on your auto loan.
- Car washes – Car washes and vehicle cleaning costs may be deductible when they help maintain a professional appearance for your rideshare business.
- Parking fees and tolls – You can only claim fees and tolls paid while on the job.
Business-related deductions
Because rideshare drivers are generally considered self-employed independent contractors, they may be eligible to claim business deductions for ordinary and necessary expenses incurred while operating their rideshare business. In addition to vehicle expenses, rideshare drivers may be able to deduct a variety of business-related costs, including:
- Membership expenses – AAA is an example of a business-related membership you can deduct.
- Cell phone expenses – If you use your cell phone exclusively for your business, you can deduct the entire amount. If not, you can deduct the portion associated with your rideshare business. The same holds true for your wireless plan.
- Refreshments – Snacks or drinks you provide for your clients are deductible up to 50%.
- Self-employment taxes – Deduct the employer-equivalent portion of your self-employed taxes when calculating your AGI for personal income tax. Learn more
- Health insurance premiums – If you pay for your own health insurance, you may be able to deduct the cost of medical, dental, and qualified long-term care insurance premiums for yourself, your spouse, and your dependents,
- Supplies – If you purchase hot bags, blankets, and courier packs for delivering or keeping food warm, this may be considered an “ordinary and necessary” expense that can be deducted. Remember, only the business use percentage can be deducted if items are also used for personal use.
Tip income deduction
Beginning in tax year 2025, some rideshare and delivery drivers may qualify for a new federal deduction for tip income. Under the One Big Beautiful Bill Act, eligible workers can deduct up to $25,000 in qualified tips from their federal taxable income, even if they take the standard deduction. For self-employed drivers, the deduction is generally limited to the net income earned from the business where the tips were received. Drivers must still report all tip income, and Social Security and Medicare taxes still apply. These provisions are set to expire in 2028.
What records do I need to claim these deductions?
Keep track of any receipts when you spend money on job-related expenses. It’s also a good idea to keep a mileage log that shows a list of the dates you drove, where you drove, and the total miles driven. By keeping detailed records, you’ll have an easier time filing your tax return, and you’ll be able to prove that what you report on your tax return is true if you are audited.
Tax tips for rideshare drivers
As an independent contractor, you’re responsible for tracking your own income and expenses throughout the year. Taking advantage of available tax deductions and maintaining accurate records can help reduce your taxable income and keep more of your hard-earned money. Here are some key tax tips every rideshare driver should know.
File quarterly estimated income taxes
When you work as a rideshare driver for Uber and Lyft, you are technically a small business owner. That means no one else is withholding wages from your paycheck for income taxes. Additionally, you are required to pay Social Security and Medicare (FICA) taxes on your earnings. All rideshare income, including tips, is taxable.
If you work entirely for yourself, you are responsible for paying quarterly estimated tax to avoid penalties for underpayment. If driving is your side-gig and you work a second job where you filled out a W-4, you might adjust your withholding percentage to cover your rideshare income.
Keep track of your mileage and save receipts
Uber’s app will keep track of the miles you drive with passengers in your vehicle, but you can also claim the distance traveled to get from a drop-off location to where your next passenger is waiting. You can still rely on Uber for a portion of your business miles but consider using a mile tracking app as well to make sure you’re getting all your deductible miles counted.
As a rideshare driver, there are certain expenses you can deduct in addition to mileage. If you use the actual method for calculating your business expenses, you’ll need receipts that back up your claims. To use the actual expense method, you need to calculate how many miles you drive for business compared to your total mileage. Once you know that percentage, you can deduct the portion of your expenses like gas, oil changes, repairs, tires, insurance, registration fees, licenses, and depreciation that are attributable to your business use. If you don’t keep track of your receipts, you can always take the standard method, which allows you to deduct a flat rate per business mile for all driving-related expenses. Still, you must track your mileage closely to make sure you are getting your maximum deduction. If you can’t provide records, the IRS might question your expenses, and you could be on the hook for back taxes and penalties.
Make sure you only deduct expenses once
If you use the standard method for calculating your deduction, you should not be deducting itemized expenses in addition to mileage. Itemized costs include things like car washes, gas, maintenance, depreciation, fees, insurance, repairs, oil, tires, registration, or lease payments. The standard method accounts for these and allows you to deduct a flat rate. Writing off these individual expenses when you use the standard method is actually double-dipping. You could wind up with a big penalty from the IRS if you are caught. For example, if you drove 5,000 miles for Uber this year, you can calculate your mileage deduction by multiplying your miles by the rate for the year. For example:
3,000 miles x $0.70 = $2,100 deduction.
Make no mistake – the #1 best thing you can do for your taxes as a rideshare driver is to file with TaxSlayer Self-Employed. Get all the credits and deductions you deserve – plus the one-on-one support you need for your unique situation.
Understand your tax form
As a rideshare driver, you typically file your tax return using the following tax forms:
- Schedule C to report your business income and expenses, since you are considered self-employed.
- Schedule SE to calculate your self-employment tax.
- Form 1099 will come from the rideshare company you work for, which details your earnings for the year.
