Uber Tax Deductions: 10 Tax Write-Offs for Rideshare Drivers

All eligible rideshare drivers, including Uber and Lyft workers, must file their tax returns as independent, self-employed individuals. This means each driver represents themselves as their own small business, which can make tax preparation and reporting business income more challenging while opening up opportunities for deductions.

As a self-employed worker, deducting business expenses is critical to lower your taxes and to ensure your return is accurate. You can deduct everyday rideshare expenses, including the fees and tolls that Uber and Lyft withhold from your pay. But your most significant tax deductions will be costs related to your vehicle, such as maintenance and depreciation.

You will file taxes as a rideshare driver if you've made $600 or more annually from non-rideshare income, for example, a referral bonus, and $5,000 or more annually in rideshare payments in most states. Uber, Lyft, and other rideshare services will send you IRS Form 1099-NEC for non-rideshare income and IRS Form 1099-K for qualifying rideshare income.

Uber, Lyft, and other rideshare drivers should read on for more information about essential tax deductions and write-offs that they should take advantage of. 

Top 10 Lyft and Uber Tax Deductions

Any necessary business expenses may be eligible to be deducted by following strict Internal Revenue Service (IRS) rules that control when and how you would make a claim. Read on to learn about the top tax deductions for rideshare drivers. 

Mileage

The IRS allows you to report and claim all fuel and maintenance costs associated with your rideshare work, which requires extensive record-keeping via a mileage log. Instead of claiming specific vehicle use expenses, you can claim a standard preset rate based on your business mileage. 

If you want to claim a deduction based on the standard mileage rate, you must do so in the first year you use your car for business purposes. You can switch back and forth between the methods from year to year later on without penalty. For example, you might decide to itemize specific expenses later if your vehicle costs get unusually high.

Standard Mileage Rate

The IRS has announced an increase in the standard mileage deduction rate for business use in 2025. The rate for business use has been raised to 70 cents per mile driven. This rate applies to all vehicles used for business purposes, including cars, vans, pickup trucks, and panel trucks.

Using the standard mileage rate will impact the depreciation method you can use for your vehicle. 

Calculating Your Mileage

Keep a running log of all the miles you drive for your rideshare. Apps and platforms, including 1-800Accountant's mobile application, have mileage tracking functions that make this easy.To calculate your total auto expenses deduction based on the standard rate, multiply your total business miles by the tax year’s mileage rate.

Mobile Phone Expenses

Your cell phone is a critical tool you use to access your work on the rideshare platform you work with. You can deduct your phone plan’s cost as a business expense, but only the portion used for business. 

You can deduct the entire bill if you only use your phone for work. Otherwise, you will need to divide the bill between your personal and business use. First, focus on how and when you use wireless data for the rideshare app or other work-related purposes, and then continue from there. 

Maintenance and Repair

You can report different vehicle costs if you decide not to claim a deduction using the standard mileage rate method. An Uber or Lyft driver can claim deductions for routine repairs and maintenance. Small maintenance costs like inspections, tire rotations, and oil changes are all expected costs required for your vehicle’s safe operation. 

Insurance

Car insurance is another required vehicle expense you can claim if you itemize your vehicle costs. While the rideshare platform's insurance should take precedence when you are on the job, you don't want to leave yourself defenseless if the platform's insurance falls through or doesn't adequately cover your costs.

Vehicle Registration Fees

Because your daily work requires you to use your vehicle, you can deduct at least a portion of your vehicle registration fees as a business expense.

Lease Payments

If you're leasing or paying off your car purchase, you can claim a portion of those payments as a business expense. You need the car for your work, so you can write off a portion of those costs in proportion to your business use of the vehicle as you drive for Uber, Lyft, or other ridesharing platforms.

Depreciation

Depreciation allows you to deduct the wear and tear your car experiences over time. It recognizes that your investment in the car is losing value.If you use the standard mileage rate, you cannot use the Modified Accelerated Cost Recovery System (MACRS) method of depreciation, which generates larger deductions in earlier years and smaller deductions later. Instead, you would have to use the straight line method of depreciation, which creates equal deductions annually. 

Car Washes

Everything you do to keep your car in good shape is considered a business expense. Keep the receipts and record when you take your vehicle to the car wash or to polish the interior. Those costs are deductible, and your passengers will appreciate the cleanliness of your vehicle. 

Parking and Tolls

You can deduct tolls and parking fees you paid while driving for your ridesharing service. Keep receipts from parking lots, garages, and tolls related to your work.

Other Business Expenses

USB charging stations/chargers, snacks, and other common rideshare amenities are considered non-vehicle business expenses that can be written off.

You can also write off fees related to professional services you rely on to transport passengers and manage your business. Eligible fees include mileage tracking software, navigation app subscriptions, bookkeeping and expense management software, and virtual accounting costs that help maximize your tax savings. 

Do Lyft and Uber Drivers Pay Quarterly Estimated Taxes?

Handling your rideshare operation taxes involves calculating and paying estimated taxes throughout the year and reporting income on your income tax return.

As an independent contractor driving for Uber, Lyft, or other ridesharing services, you must make estimated quarterly tax payments as your down payment on your annual income tax. 

You can calculate your estimated tax rate with IRS Form 1040-ES and then use IRS Form 1040 to report your income on your final yearly return. You'll use 1040 Schedule C to report your profit and loss from rideshare driving activities. To fill out Schedule C, you’ll need to consult each 1099 form you receive from your rideshare company. 

How Do Rideshare Drivers Pay Taxes?

You will use IRS Form 1099-NEC and/or IRS Form 1099-K as supporting documents for your tax return. Forms you may use to file your taxes and claim tax deductions include: 

• IRS Form 1040. File Form 1040, U.S. Individual Income Tax Return, to report taxable income and calculate your tax liability for the year.

• IRS Schedule C (Form 1040). Report your rideshare business income on IRS Form 1040, Schedule C, Profit or Loss from Business. Schedule C reports your self-employment income and business tax deductions. 

• IRS Schedule SE (Form 1040). Form 1040, Schedule SE, Self-Employment Tax, should be used to report your freelance income and calculate the self-employment tax liability. You’ll also need to pay income taxes, but you can deduct half of your self-employment tax. 

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Uber and Lyft offer tax guides with helpful insights for drivers who handle their own tax preparation and filing responsibilities. 

Consult a Tax Professional to Maximize Your Rideshare Deductions

Handling IRS compliance and preparing tax materials for your rideshare business is a complex, time-consuming responsibility. If you make a mistake or miss a deadline, you could be inviting penalties and additional scrutiny from the IRS. That's why many rideshare, gig-style workers trust 1-800Accountant, America’s leading virtual accounting firm, for their financial needs.

Whether you need business tax preparation, tax advisory, or any of our professional accounting services, we have the affordable solutions you need to ensure your rideshare business remains compliant. Schedule a quick consultation–usually 30 minutes or less—to learn more.