Uber Tax Deductions | What expenses can Uber drivers deduct?
July, 15 2025 by Veselina Arangelova, EA
As I contemplate a clever opening for this blog, I wonder if all taxis around the world are yellow. Maybe they are just the ones crawling through traffic on New York's busy streets. I know for a fact that London's cabs are decidedly black, and in other cities I've visited, they are white. Whatever the color, the experience of hailing a ride has never been the same since Uber and Lyft entered the chat.
The rideshare service has been a part of my life since a college friend recommended it as an excellent alternative when a not-so-pleasant incident left my car in the shop for a month. Since then, like millions of people, I've trusted strangers with my location to come pick me up and be a part of my journey somewhere. As my mother says, ridesharing is pure magic; you only need your phone and a credit card.
On the other side of this experience are the hardworking drivers, without whom this service wouldn't be what it is. If you are one of them, you are most likely an independent contractor and have to figure out taxes and deductions on your own, and that is no fun.
My goal in this blog is to give you a framework for thinking about the expenses you incur because of your ridesharing gig and how to properly report and keep track of them in case of an audit.
What expenses can drivers deduct?
Every business has tools used explicitly in day-to-day activities, and without them, it would be impossible to deliver products or services. For an Uber driver, that is a car. But beyond the obvious major expense, there are also bank fees, mobile plan fees, the cost of tax preparation, and maybe even that radio subscription that you pay for to keep your passengers entertained. To make it easier, I'll group the possible expenses into three broad categories: car–related, service-related, and administrative expenses.
Car-related expenses
As I already mentioned, a car is an essential tool for ridesharing. You can't shuttle passengers without a reliable vehicle. Your car payments, insurance policy costs, gas or electric charging fees, and routine maintenance are all expenses you can deduct from your income as an Uber driver. These expenses are directly related to your vehicle use and are deductible.
The gig economy has made it possible to be self-employed, providing a service to others using personal property. Your car is possibly the single highest expense you have if you drive for Uber, but unless you use it exclusively for business purposes, you can deduct only the portion of total expenses that are directly related to your business use.
A common and costly mistake people make when reporting expenses on their Schedule C is reporting them as 100% business-related, while some may be personal. You can avoid this by calculating your costs using the standard mileage rate. The standard mileage rate for 2024 is 0.67 cents per mile for business. This number accounts for routine expenses, such as gas, oil changes, and other car maintenance, and depreciation related to using one's vehicle for work. Let's look at an example:
Bill is semi-retired and enjoys meeting new people. He fancies himself a good driver and an even better conversationalist, so he signed up for Uber. In 2024, he drove 7600 miles, per the statement he received from the company. Bill wants to simplify his tax filing and uses the standard mileage tax rate to calculate his deduction for the year, which is 7,600 x 0.67 = $5,092 in car-related expenses.
Using the standard mileage rate can help you simplify your reporting and avoid costly trouble. You can find the total miles you've driven during the year in the report Uber will provide you with.
There is also the actual expense method for calculating this deduction. The actual expenses deduction is exactly what it sounds like—a sum of your actual expenses. That means the total of all your receipts for gas or electric charging fees, tools, and maintenance, with proof of invoice and proof of payment available to support your numbers.
While this is tedious and time-consuming, it could be the better way to account for your expenses as a driver. Search the Internet and you will likely find mobile applications, spreadsheets, and organizational tips to help you with this record-keeping exercise. I leave that discovery to you.
Service-related expenses
Technology platforms, like Uber, are not self-supporting. They rely on the skills of other professionals to keep them running for the benefit of the community of drivers and riders. To keep the lights on, the company automatically deducts fees from your pay, which are neatly summarized in the driver's year-end report (Form 1099). Look for them; they are deductible. Follow the instructions in your driver's account to download all the relevant information the company provides.
Administrative expenses
A mobile plan is another significant expense if you are a driver, no question. You need to stay connected to know where to pick up your next passenger from. Mobile service plan fees are deductible if used for business. However, your provider may have bundled your plan with fees for other services they provide. Home internet or a wearable device line, and multiple cellphone lines for your family members are some of the items that may be bundled together for one great price. You'll have to unbundle the total amount and expense only the portion representing your cost related to your business use.
A common error is reporting everything when some may belong to other users in your family, not related to your business use. That monthly fee for the installment plan for your child's phone upgrade is not a business deduction you can take. In the event of an audit, you should be able to provide a copy of your monthly statements and demonstrate how you arrived at your total expense numbers. If you don't, you'll likely lose the deduction.
Bundling is common for insurance coverage as well. You often get the best price when you bundle your car insurance with your home or boat insurance. At tax time, you will have to review your policy statements to separate the premiums for your car from the ones you pay for your home or boat. Inflated expenses may result in greater deductions, and that may temporarily feel great as your refund keeps getting bigger and bigger, but don't be fooled. Revenue agents have the authority to adjust the return you filed because of an audit, and you'll have to pay back any excess refund (beyond what is rightfully owed to you) with interest and penalties.
Finally, tax preparation is a costly service. Whether you pay someone to keep your records in good order and file your taxes or take on this responsibility yourself, you can deduct the business portion of the cost of the service or the software you use. As for any other expense for your business, you should keep the invoice and proof of the payment you made for your records.
You should know that when using tax preparation software (if you self-prepare your return), the require Schedule C, where you'll be reporting your business income and expenses, doesn't group expenses like I just did. So, getting to know the reporting requirements and the form is helpful before you sit down and enter your numbers. You can look at the latest version of Schedule C (Form 1040), Profit or Loss from Business, and download the instructions for review.
For you to be able to claim the deduction, business expenses need to be ordinary and necessary. Whether you take on the cost of in-car Wi-Fi or satellite radio service, keeping your receipts and splitting between personal and business use is a great starting point. I will bid you farewell with this piece of professional advice: Think twice before you trust any internet schemes or unsubstantiated advice—if it sounds too good to be true, it probably is.
