Uber and Lyft Driver Taxes: What You Need to Know

Driving for Uber or Lyft is one of the most flexible ways to earn money, but at tax time it comes with a catch: you’re running a business, and the IRS treats you like one. The good news is that once you understand which forms you’ll get, what you can deduct, and how your income is taxed, filing gets far less stressful. Here’s what every rideshare driver should know.

1 What tax documents will you receive?

Depending on how much you earned and how, you may receive up to two forms from each platform, plus a year-end summary that ties everything together.

1099-K Your ride income

This form reports the gross amount passengers paid for the rides you gave. For the 2025 tax year and beyond, you’ll receive a 1099-K only if you had more than $20,000 in gross ride payments and more than 200 rides in the year. That threshold was restored by the One Big Beautiful Bill in July 2025, reversing the much lower limits that had been planned. A handful of states set lower thresholds, and you can opt in through your driver app to receive a 1099-K even if you fall under the federal limit.

1099-NEC Your bonuses and referrals

This form reports your non-driving income: referral bonuses, sign-up and streak bonuses, quest payments, and other promotional incentives. For 2025 you’ll receive one if that income totals $600 or more. Starting with the 2026 tax year, the threshold rises to $2,000. (This income used to appear on a 1099-MISC. It moved to the 1099-NEC beginning in 2020, so older guides you find online may be out of date.)

SUMMARY Your annual tax summary

Both platforms also give you a year-end tax summary, or driver dashboard, that breaks down your earnings, the fees and tolls they charged, and your online miles. Keep it. It’s often the single most useful document you have, especially in a year when you don’t receive a 1099 at all.

2 What expenses should you track?

Every dollar of legitimate business expense lowers the income you’re taxed on, so good tracking is where drivers save the most. Common deductible expenses include:

• Platform commissions, service fees, and booking fees
• Tolls and parking
• Passenger amenities like water, gum, and phone chargers
• Phone mount, dashcam, car washes, and interior cleaning
• Your cell phone and data plan (the business-use portion)
• Bookkeeping and tax prep fees, plus related bank charges
• Your vehicle, handled one of two ways (more on that next)

3 Mileage vs. actual expenses, your biggest deduction

For most drivers, the vehicle is the largest write-off, and you choose one of two methods:

• Standard mileage rate: multiply your business miles by the IRS rate. This is usually simpler, and often the larger deduction.
• Actual expense method: deduct the business-use share of your real costs, including gas, maintenance and repairs, insurance, registration, lease or loan interest, and depreciation.

You can’t use both methods for the same vehicle in the same year, so it’s worth comparing which gives you the bigger deduction. Here are the current IRS standard mileage rates:

Note the mid-year change for 2026: the IRS raised the rate from 72.5 to 76 cents on July 1, so you’ll apply each rate to the miles you drove during that part of the year. Track your business miles all year long: miles with a passenger, miles driving to a pickup, and miles between rides while you’re logged on and available. Your app summary reports “online miles,” but a mileage app or a simple log of your own is the best backup if the IRS ever asks.

4 How your income is actually taxed

Here’s the part that surprises new drivers. Your tax preparer starts with your gross income, subtracts your business expenses, and the result is your net profit. You pay two kinds of tax on that profit:

• Income tax at your regular rate, based on your total income and bracket
• Self-employment tax of 15.3%, which covers the Social Security and Medicare that an employer would normally split with you

That 15.3% is on top of your income tax, which is why setting money aside during the year matters so much. Since no one withholds taxes from your rideshare pay, the IRS generally expects quarterly estimated payments. A common rule of thumb is to set aside 25 to 30% of your net earnings so the money is there when each deadline arrives.

There’s some good news too. Many self-employed drivers qualify for the Qualified Business Income deduction, worth up to 20% of net profit, which the 2025 law made permanent. And a new federal deduction for reported tips, in effect for tax years 2025 through 2028, may let eligible drivers deduct a portion of their tip income on their personal return. Both come with rules and income limits, so they’re worth reviewing with your preparer.