Cecily Zamora
Uber drivers are considered independent contractors, which means they are responsible for their own taxes. As such, they can deduct the costs associated with the business use of their vehicle, including mileage, from their income tax return. The standard mileage rate for 2024 is 67 cents per mile, and for 2025 it is 70 cents per mile. This rate includes driving costs, gas, repairs, maintenance, and depreciation. Uber drivers can also deduct other expenses, such as phone costs, tolls, car loan interest, and even snacks and drinks for passengers. It is important to keep accurate records and receipts to support these deductions.
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What You'll Learn
Standard mileage deduction
As an Uber driver, you can deduct the actual expenses of operating your vehicle or you can use the standard IRS mileage deduction. The standard mileage deduction is a simplified method where you can deduct a set rate for each business mile driven. This rate is set by the IRS annually and includes driving costs such as gas, repairs, maintenance, and depreciation. For 2024, the standard mileage rate is $0.67 per mile. This is a more common and easier option than the actual expenses method, which requires meticulous record-keeping of all driving expenses.
To use the standard mileage deduction, you must choose to do so in the first year your vehicle is available for business use. You can then switch to the actual expenses method in subsequent years. However, if you use a leased vehicle, you must use the standard mileage rate for the entire lease term. It is important to note that the standard mileage rate does not apply to oil changes, and you cannot deduct these costs separately. Additionally, the first and last rides of the day, which are considered commuting miles, cannot be deducted for business mileage.
The IRS requires precise mileage logs to claim legitimate business miles. While you can use your Uber app to track mileage deductions, it is not recommended as it may not be as accurate as tracking your own miles. You can use a manual log or a mileage-tracking app to keep accurate records. It is also a good idea to keep a separate bank account or credit card for business expenses to easily distinguish them from personal expenses.
By using the standard mileage deduction, you can ease the burden of using your personal vehicle for work and simplify your tax reporting. This deduction is designed to provide financial relief by reducing your taxable income.
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Actual car expenses
As an Uber driver, you can deduct the actual expenses of operating your vehicle. These expenses are difficult to track, so it is recommended that you seek professional tax help.
With this method, you can deduct a percentage of your actual costs for gas, repairs, vehicle depreciation, insurance, and other vehicle-related costs. This percentage is based on how much you use the vehicle for business purposes. For example, if you use your car for business 60% of the time, you can deduct 60% of the bill and 60% of the cost of the vehicle.
To deduct actual car expenses, you will need to have receipts to support these expenses. You will file Schedule C to report your profit to the IRS. You can also deduct the total cost of a car purchase if you bought a vehicle solely for ridesharing. If you bought it for personal and business use, you can deduct the percentage of the cost equal to the percentage you use the vehicle for business.
Other deductible expenses include tolls and parking fees, Uber and Lyft fees and commissions, snacks for passengers, USB chargers/cables, personal protective equipment (PPE), and separate cell phones for driving.
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Business-related mileage
As an Uber driver, you can deduct the costs associated with the business use of your vehicle. This includes business-related mileage, such as the mileage driven to pick up riders, after dropping off passengers, and before rides were canceled. The Uber tax summary of total online miles includes the miles driven while waiting for a trip, en route to a rider, and on a trip.
There are two ways to calculate the business use of your car:
- Deduct the actual expenses of operating the vehicle, including gasoline, oil, insurance, car registration, repairs, maintenance, and depreciation or lease payments. If you are deducting the actual car costs, you can only deduct the cost of the portion of gas used while driving for Uber.
- Use the standard IRS mileage deduction. For 2024, the rate is 67 cents per mile, and for 2025, it is 70 cents per mile. This rate includes driving costs, gas, repairs/maintenance, and depreciation. The standard mileage deduction is the more common and easiest option and usually produces a higher deduction.
It is important to carefully track your miles as the IRS requires a mileage log. You can use a manual log or a mileage-tracking app. You must keep accurate and detailed records, whether you deduct the standard mileage rate or the itemized expenses from your net income.
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Tax-deductible expenses
As an Uber driver, you are considered an independent contractor, and the company does not withhold taxes from your payments. This means you are responsible for reporting and paying your own taxes. However, you can save on your taxes with eligible business expense deductions.
Your biggest tax deductions will be vehicle-related costs. You can either deduct the actual expenses of operating the vehicle or use the standard IRS mileage deduction. The standard mileage rate for 2024 is $0.67 per mile and $0.70 per mile in 2025. This rate includes driving costs, gas, repairs, maintenance, and depreciation. If you use the standard mileage deduction, you cannot separately deduct costs like oil changes or gas.
Other deductible expenses include:
- Tolls and parking fees
- Uber and Lyft fees and commissions
- Snacks for passengers
- USB chargers/cables
- Personal Protective Equipment (PPE) like face masks and hand sanitizer
- Separate cell phones for driving and their associated costs, such as a portion of your phone bill
- Car loan interest
It's important to carefully track your expenses and miles as the IRS requires documentation, such as receipts and mileage logs, to support your deductions.
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Self-employment taxes
As an Uber driver, you are considered an independent contractor, not an employee. This means that Uber does not withhold taxes from your payments. You are responsible for self-employment taxes on your gross income, in addition to regular income taxes. You must report all income to the IRS and will need to file a tax return if you earned more than $400 from Uber in a year. You will also need to fill out Schedule C and Schedule SE with Form 1040.
You can save on your taxes with eligible business expense deductions. The largest tax deduction for most Uber drivers is the business use of a car. You can deduct the actual expenses of operating the vehicle, including gasoline, oil, insurance, car registration, repairs, maintenance, and depreciation or lease payments. Or you can use the standard IRS mileage deduction, which is 67 cents per mile for 2024. This includes driving costs, gas, repairs/maintenance, and depreciation. The standard mileage deduction is usually the higher and easier option.
You can also deduct other expenses, such as the cost of a separate smartphone for driving, including depreciation, a portion of the bill, and a portion of the cost of the phone related to business use. You can deduct 100% of all costs associated with a phone dedicated solely to your business. Other deductible expenses include tolls, car loan interest, and snacks and PPE for passengers.
It is important to carefully track your miles and expenses, as the IRS requires a mileage log and receipts to support your deductions. You can use a manual log, or a mileage-tracking app. Uber provides a tax summary that breaks down the amounts on your 1099-K and 1099-NEC forms, which you can use to prepare your tax return.
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Frequently asked questions
Yes, Uber drivers can write off mileage on their vehicle from their income tax return. The standard mileage rate for 2024 is $0.67 per mile, and for 2025 it is $0.70 per mile.
Uber drivers can also write off other vehicle-related expenses, including gas, oil, repairs, insurance, maintenance, and depreciation. Additionally, Uber drivers can deduct the cost of their mobile phones and accessories, such as chargers, as well as any work-related apps and subscriptions. Other expenses, such as snacks and drinks for passengers, are also tax-deductible.
Uber drivers must keep accurate and detailed records of their deductions, including mileage logs, receipts, and other documentation. It is recommended to use a mileage-tracking app to keep track of mileage.
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