Uber, Lyft and delivery drivers: taxes and deductions
For taxes, an Uber, Lyft, DoorDash or Instacart driver is self-employed. No tax is withheld, and you pay it yourself in April. The good news: drivers have plenty of legitimate deductions, and the biggest one is mileage.
Which forms you get
- 1099-NEC — if the platform paid you for services (bonuses, incentives) $600 or more for 2025; for 2026 the threshold rises to $2,000.
- 1099-K — for payments through the platform, if they topped $20,000 and 200 transactions in the year.
- The annual tax summary in the app — everyone gets one, even with no 1099.
All income is taxable, even without a form. Work from the platform's annual summary, not just the 1099.
Which taxes a driver pays
- Self-employment tax — 15.3% on 92.35% of net profit. It's Social Security and Medicare, which an employer splits with an employee; a self-employed person pays both halves.
- Income tax — federal and state, on profit after deductions.
If you'll owe more than $1,000 for the year, the IRS expects quarterly payments, or it charges a penalty.
Mileage is the main deduction
There are two ways to deduct the car:
- The standard mileage rate. For 2026: 72.5 cents a mile from January through June and 76 cents from July 1, after the IRS raised the rate mid-year because of fuel prices. For 2025: 70 cents. Gas, repairs, insurance and depreciation are built into the rate.
- Actual expenses — gas, repairs, insurance, lease or depreciation, times the business share of your miles. Better for expensive cars or big repair bills, but it takes more records.
Miles count from when you turn on the app and drive to a rider or order, not only miles with a passenger. The platform shows only part of your mileage, so keep your own log. Apps like MileIQ or Everlance track it automatically. Without a log, the deduction may not survive an audit.
Other deductions
- platform commissions and fees, if they're included in the 1099-K total;
- your phone and plan, for the business share;
- tolls and parking while working (deductible on top of the standard rate);
- car washes, mats, water and chargers for riders;
- insulated bags and delivery gear.
The new deduction for tips
From 2025 through 2028 there's a deduction for qualified tips of up to $25,000 a year. Taxi and rideshare drivers and delivery workers are on the list of occupations that qualify. For the self-employed, the deduction can't exceed net profit from that work, and it phases down above $150,000 of income ($300,000 for a couple).
Note: it lowers income tax, not self-employment tax, which still applies to tips.
Common mistakes
- reporting only the 1099 amount instead of all income;
- not keeping a mileage log and rebuilding it "from memory" in April;
- deducting 100% of miles, including personal trips;
- skipping quarterly payments and then getting a penalty.
If you drive for more than one platform, it's worth setting up your records properly once; it saves hours and hundreds of dollars later. I can prepare your return.
Sources: IRS: Standard mileage rates, IRB 2026-29 (Announcement 2026-11), IRS: Form 1099-K threshold, IRS: Gig economy, IRS: No tax on tips. Checked October 26, 2026.