Rideshare Driver Taxes: Uber and Lyft Income, Mileage Rates, Tips and What the IRS Checks

If you drive for Uber or Lyft, you are not an employee of the app. For tax purposes, you are running a small transportation business. That has one big upside, which is deductions, and one big downside, which is that nobody withholds a dime.

Most rideshare tax problems come from three places: reporting the wrong income number, claiming mileage without a log, and forgetting self-employment tax. Here is how to avoid all three.

Your income: start with the forms, but do not stop there

Rideshare companies may report what they paid you on Form 1099-K, Form 1099-NEC, or both, depending on how the payments flow. A Form 1099-K comes under IRC Section 6050W and, for payment apps and platforms, is required only when payments exceed $20,000 and the number of transactions exceeds 200. A Form 1099-NEC comes under IRC Section 6041, with a $600 threshold for payments in 2025 and $2,000 for payments made after December 31, 2025. See Form 1099-K for gig workers.

Two rules keep you out of trouble:

• Report all of it. Income is taxable whether or not a form shows up. If you drove for two apps and only one sent a form, both go on your return.
• Report the gross, deduct the fees. A 1099-K can show gross fares before the platform's cut. Your Schedule C gross receipts should be at least the 1099-K total, and the platform's service fees and commissions come off as expenses. The step-by-step is in reconciling a 1099-K on Schedule C.

Download the annual tax summary from each app. It usually breaks out gross fares, fees, tips, and the miles you drove while online. That summary is the most useful single document you will have.

The car: standard mileage rate or actual expenses

Your vehicle is your largest deduction. Rev. Proc. 2019-46 lets you deduct either the business standard mileage rate times your business miles, or the actual costs of operating the car allocable to those business miles.

The standard mileage rate

Business miles driven	Rate	Source
During 2025	70 cents per mile	2025 Schedule C instructions
January 1 to June 30, 2026	72.5 cents per mile	Notice 2026-10
July 1 to December 31, 2026	76 cents per mile	Announcement 2026-11

That mid-year change is unusual. The IRS raised the 2026 business rate effective July 1, 2026, citing recent increases in the price of fuel. For 2026, you need to know which miles you drove before July 1 and which you drove after. A mileage log with dates handles that automatically. A guess does not.

The standard rate replaces your actual operating costs: depreciation or lease payments, maintenance and repairs, tires, gas, oil, insurance, and license and registration fees. Under section 4.03 of Rev. Proc. 2019-46, you can still deduct business parking fees and tolls as separate items, along with the business portion of interest on the car loan to the extent allowed under IRC Section 163.

Limits on using the standard rate

Section 4.05 of Rev. Proc. 2019-46 says you cannot use the standard rate:

• For five or more vehicles you use at the same time, as in a fleet.
• For a leased car, unless you use the standard rate for the entire lease period.
• For a car on which you have claimed accelerated depreciation, a Section 179 deduction, or bonus depreciation.

The practical lesson: decide in the first year. If you start with actual expenses and accelerated depreciation, you generally cannot switch to the standard rate for that car later. If you start with the standard rate, you can switch to actual costs later, but you must use straight-line depreciation for the remaining life of the car.

Actual expenses

Actual expenses can produce a bigger deduction for an expensive car or a high-cost year. But you need every receipt, and you must split each cost between business and personal use based on miles. That split is only as good as your mileage log. Our full comparison is in standard mileage vs. actual expenses.

Which miles count

Business miles are deductible. Personal miles are not. Treas. Reg. 1.262-1(b)(5) says the costs of commuting to your place of business are personal expenses.

Miles driven to pick up a passenger and to drop one off are business miles. Errands, personal trips, and driving with the app off are not. The trip from home to where you start working, and back home at the end, can raise commuting questions that depend on your facts. Whatever position you take, your log has to support it.

IRC Section 274(d) requires adequate records or sufficient evidence to substantiate vehicle expenses. That is a higher bar than most deductions. The app's "online miles" figure is helpful, but it may not capture every business mile you drove and it is not a substitute for your own log. See what a mileage log has to show.

The IRS does not argue much about whether you drove. It argues about whether you can prove how far, when, and why.

Other deductions drivers miss

• The business share of your phone and data plan.
• Phone mounts, chargers, and dash cameras used for the business.
• Water, mints, and similar items you provide to passengers.
• Car washes and cleaning, if you use actual expenses. If you use the standard rate, routine operating costs are already included.
• Platform fees and commissions withheld from fares.

Each of these is a deduction only if it is an ordinary and necessary business expense and you can prove it.

Tips: the new deduction for rideshare drivers

For tax years 2025 through 2028, IRC Section 224 allows a deduction for qualified tips. The final regulation, Treas. Reg. 1.224-1(h), lists "Taxi and Rideshare Drivers and Chauffeurs" as an occupation that customarily and regularly received tips, and it names platform or app-based rideshare drivers as an example.

Key limits: the deduction is capped at $25,000, it phases down by $100 for each $1,000 of modified adjusted gross income over $150,000 ($300,000 on a joint return), married taxpayers must file jointly, and for a self-employed driver it cannot exceed the net income from the driving business. Tips must be voluntary. Mandatory charges are not tips. For a self-employed driver, the tips generally have to be shown on an information return the platform furnishes to you. For tax year 2025, a transition rule in Treas. Reg. 1.224-1(d)(2) lets them be included in the total on the form instead of on a separate line. The full rules are in the no tax on tips deduction.

Tips are still part of your gross receipts. The deduction comes later, on your Form 1040, and it does not reduce self-employment tax.

Self-employment tax and estimated payments

Your net profit from driving is subject to self-employment tax at 15.3% on 92.35% of the profit once your net earnings reach $400. See how self-employment tax is calculated. Because nothing is withheld, the IRS expects quarterly estimated payments. The 2026 due dates are April 15, June 15, and September 15, 2026, and January 15, 2027.

A driver's year-end checklist

1. Download every 1099 and the annual summary from every app.
2. Total gross fares, fees, and tips. Tie them to the forms.
3. Total business miles from your log, split by date if you drove in 2026.
4. Choose standard mileage or actual expenses, consistent with prior years for that car.
5. Add parking, tolls, phone, and other business costs with receipts.
6. Complete Schedule C and Schedule SE, and consider the tips deduction.
7. Set up next year's estimated payments.