Driving for Uber, Lyft, DoorDash, Instacart or any other gig platform makes you a self-employed independent contractor in the eyes of the IRS — not an employee. That means no taxes withheld, no W-2, and full responsibility for federal income tax, self-employment tax (15.3%), and most state income taxes. The upside? Dozens of deductions that W-2 workers cannot claim. Here is the 2025 playbook to keep more of every fare and tip.
The forms you will receive in early 2026
For tax year 2025, you should receive:
- Form 1099-NEC from each platform if you earned $600 or more in non-employee compensation. New for 2025: this $600 threshold continues to apply.
- Form 1099-K if your gross payments exceeded $2,500 on third-party platforms (the IRS phase-in threshold for 2025; $600 will apply in 2026 and later).
- A driver summary (Uber, Lyft and DoorDash all publish them in January) with your gross earnings, fees, tolls, miles, and bonuses. This document is gold for your Schedule C.
If you earn under the 1099 threshold, you still have to report 100% of the income. The IRS gets the data either way.
The single biggest deduction: business miles
For 2025 the IRS standard mileage rate is $0.70 per mile (up from $0.67 in 2024). This rate covers gas, depreciation, insurance, maintenance, oil, tires — everything except parking, tolls, and interest on a car loan, which you deduct separately.
You can deduct miles for:
- Driving with a passenger or active delivery
- Driving to pick up the next passenger / order
- Driving home from the last active trip of the shift (sometimes)
- Trips to the gas station, car wash and mechanic related to rideshare
You cannot deduct your commute from home to your usual starting area before you log in. Turn the app on first.
How much is this worth?
A full-time driver logging 35,000 business miles per year deducts $24,500. At a 22% federal rate plus 15.3% SE tax, that single line item saves about $9,135 — usually more than the total federal income tax owed.
You must keep a contemporaneous mileage log. Apps like MileIQ, Stride, Everlance or Hurdlr cost $5–10/month and are 100% deductible.
Standard mileage vs actual expenses
You choose one of two methods per vehicle, per year:
- Standard mileage: business miles × $0.70 (simple, audit-friendly).
- Actual expenses: business-use % × (gas + insurance + repairs + lease + depreciation + registration).
If you bought a new car for rideshare and put 70% of its miles on the platform, the actual method may win in year 1. After that, standard mileage almost always wins for high-mileage drivers.
Important catch: if you use actual expenses in year 1 of a vehicle you own, you are locked out of standard mileage for that car forever. For leased vehicles, you must use the same method every year of the lease.
Other 2025 deductions rideshare drivers commonly miss
- Phone and data plan — business-use percentage of your monthly bill.
- Phone mount, dash cam, charger cables — 100% if used only while driving.
- Snacks, water bottles, gum offered to passengers (a small but legitimate expense).
- Cleaning supplies, car wash, vacuum service — keep receipts.
- Tolls and parking when on a trip (these are on top of the mileage rate).
- Platform fees and commission — already netted in your 1099-NEC usually, but check.
- Health insurance premiums (self-employed health insurance deduction).
- Half of self-employment tax — automatic adjustment on Form 1040.
- QBI deduction: up to 20% of net business income for most drivers earning under $241,950 single / $483,900 MFJ in 2025.
Self-employment tax and quarterly estimated payments
Net Schedule C profit × 92.35% × 15.3% = your self-employment tax (Social Security + Medicare). The IRS expects this paid throughout the year via quarterly estimated payments:
- Q1 2025 — April 15, 2025
- Q2 2025 — June 16, 2025
- Q3 2025 — September 15, 2025
- Q4 2025 — January 15, 2026
A safe-harbor shortcut: pay at least 100% of last year's total tax (or 110% if your AGI exceeded $150,000) in quarterly installments to avoid underpayment penalties.
A realistic 2025 example
Carlos drives full-time for Uber in San Diego. His 2025 totals:
| Item | Amount |
|---|---|
| Gross earnings (1099-NEC + 1099-K) | $58,000 |
| Less: business miles 32,000 × $0.70 | -$22,400 |
| Less: phone (80% biz) | -$960 |
| Less: tolls + car wash | -$1,100 |
| Less: dash cam + supplies | -$420 |
| Schedule C net profit | $33,120 |
| SE tax (15.3% × 92.35% × $33,120) | $4,680 |
| Half SE tax adjustment | -$2,340 |
| 20% QBI deduction | -$6,156 |
| Federal taxable income (single, std deduction) | $9,684 |
Carlos owes roughly $968 in federal income tax plus the $4,680 SE tax, for a total federal liability around $5,648 — far less than the 22% bracket would suggest, because of the mileage deduction and the QBI break.
How USA Taxes makes this easy
The USA Taxes wizard imports your platform summary, lets you enter total business miles in one field, applies the 2025 IRS rate automatically, and generates Schedule C and Schedule SE plus your four 1040-ES vouchers for 2026 quarterly payments. Choose the Self-Employed plan to also get a licensed CPA review before downloading your return.
Educational article only. Not legal or tax advice. State rules vary — California AB-5, for example, has special considerations for rideshare drivers.