What taxes do Uber and Lyft drivers owe?
As an independent contractor for both platforms, three taxes hit your earnings:
| Tax type | Rate | Notes |
|---|---|---|
| Self-employment tax | 15.3% of net profit | Covers Social Security + Medicare (both halves) |
| Federal income tax | 10–22% (most drivers) | Stacks on top of SE tax |
| State income tax | 0–9%+ depending on state | Zero in TX, FL, NV; high in CA, NY |
The piece that shocks new drivers is the self-employment tax. As an employee, you'd only see 7.65% taken from your check (your half). As a contractor, you owe the full 15.3% because you're simultaneously the employer and the employee. The IRS does let you deduct half of it when calculating your income tax, which softens the blow slightly.
Important: All of this applies to net profit — your rideshare earnings minus your business expenses. Mileage is almost always the largest deduction and can reduce taxable income by 40–60% of gross earnings for drivers who track carefully.
The 1099-K vs 1099-NEC — what Uber and Lyft actually send
Uber and Lyft are classified as "marketplace facilitators" by the IRS, so their tax forms work differently than DoorDash or Instacart:
- 1099-K — reports your gross trip earnings (what passengers paid) above the reporting threshold. For 2024, the threshold is $5,000; dropping to $2,500 for 2025 and $600 from 2026.
- 1099-NEC — reports incentive pay: bonuses, quests, referral fees, and driver rewards. Usually a separate form from the same platform.
The 1099-K gross earnings trap: Uber's 1099-K shows the gross fare passengers paid — not your take-home after Uber's service fee (~25%). You report gross earnings and then deduct Uber's service fee as a business expense on Schedule C. If you only report what hit your bank account, you'll underreport and miss the deduction. Uber's annual Tax Summary document breaks this down; download it before you file.
The mileage deduction — every mile counts
This is the most important number on the page. The IRS lets rideshare drivers deduct every business mile at the standard rate:
- 2024: 67¢ per mile
- 2025: 70¢ per mile (current)
- 2025: 70¢ per mile
For rideshare, deductible miles include:
- Miles driven with a passenger in the car
- Miles driven to pick up a passenger after accepting a ride request
- Miles driven while the app is on and you're waiting for a request (Uber/Lyft online miles)
The Uber and Lyft apps report "online miles," which should capture all of the above. But many drivers find the app undercounts slightly — keep a secondary log (Stride or Everlance are free) to confirm.
Real example: A driver earns $30,000 gross and drives 22,000 business miles. At 70¢/mile, that's a $15,400 deduction. Net profit: $15,260 (not $30,000). Their total tax drops from ~$8,500 to ~$4,200. The mileage deduction alone saved over $4,000.
Standard mileage vs. actual expenses
You can deduct mileage using the standard rate or track actual expenses (gas, insurance, repairs, depreciation) and deduct the business-use percentage. Standard mileage wins for most drivers — it requires only a mileage log and involves less math. Actual expenses may be better if you drive a very fuel-inefficient car or have high insurance costs.
Other deductions rideshare drivers miss
- Uber/Lyft service fees — the platform's cut, shown in your annual Tax Summary
- Phone — business-use percentage — if your phone is 60% Uber-related, deduct 60% of the bill
- Car mount, charger, USB hub — anything used specifically for rideshare
- Water, mints, phone charging cables for passengers — small but legitimate
- Tolls and parking fees incurred during rides
- Car washes — business-use portion
- Roadside assistance membership (AAA) — business portion
- Health insurance premiums — if you're self-employed and not covered elsewhere
- Half of self-employment tax — the IRS lets you deduct 50% of SE tax from gross income
Quarterly estimated taxes
If you expect to owe more than $1,000 in federal tax for the year, pay quarterly. The deadlines:
- April 15 — Q1 earnings (Jan–Mar)
- June 15 — Q2 earnings (Apr–May)
- September 15 — Q3 earnings (Jun–Aug)
- January 15 — Q4 earnings (Sep–Dec)
Pay at IRS.gov/payments in about 10 minutes. If rideshare is a side hustle and your W-2 job already withholds enough, you may not need quarterly payments — check IRS Form 1040-ES to estimate.
Not sure where you stand?
Answer 8 questions and get a personalized breakdown of your specific tax situation — free.
Check my rideshare hustle — free →Common mistakes rideshare drivers make
1. Relying only on the in-app mileage summary
Uber and Lyft's in-app mileage figures are generally reliable, but they occasionally miss miles at the edges of trips or fail to log correctly if the app crashes. A secondary tracker (Stride, Everlance) running in the background costs nothing and covers any gaps.
2. Treating gross earnings as taxable income
Your 1099-K shows gross fares — what passengers paid. That's higher than what you actually received. Deduct the platform's service fees on Schedule C. Skipping this means you overpay taxes on income you never kept.
3. Not setting money aside during active periods
Rideshare income can spike around holidays and events. Set aside 25–30% of every payment into a separate savings account as it comes in. A dedicated account named "Tax" makes it impossible to forget.
4. Missing the first quarter
Many drivers who start in January miss the April 15 quarterly deadline because they don't realize they owe until filing season. If you drove in Q1, estimate your earnings and pay by April 15.
Frequently asked questions
Do Uber and Lyft drivers have to pay taxes?
Yes. Both platforms classify drivers as independent contractors. No taxes are withheld. You owe self-employment tax (15.3%) plus federal and state income tax on net profit.
Does Uber send a 1099 or a W-2?
Uber sends a 1099-K for trip earnings and a 1099-NEC for incentive payments. No W-2 is issued. You receive both forms digitally through Uber's Tax Summary in the driver dashboard.
Can Uber and Lyft drivers deduct mileage?
Yes. Deductible miles include rides with passengers, miles to pick up passengers, and miles driven while the app is on waiting for requests. Use the standard rate: 70¢/mile (2025).
How much should rideshare drivers set aside for taxes?
Set aside 25–30% of net earnings (after mileage) to cover self-employment tax plus federal and state income tax. Adjust after your first full tax season.
Do rideshare drivers need to pay quarterly taxes?
Yes, if you expect to owe more than $1,000 in federal tax for the year. Pay at IRS.gov/payments by April 15, June 15, September 15, and January 15.
The bottom line
Uber and Lyft drivers owe self-employment tax plus income tax on net profit — but the mileage deduction typically cuts taxable income nearly in half. The drivers who get surprised in April are those who didn't track miles, didn't know about the platform fee deduction, or skipped quarterly payments.
Install a mileage tracker on day one, download your annual Tax Summary from Uber/Lyft each January, and set aside 25–30% of every payout. That's the whole system. Most rideshare drivers can handle their own taxes without a CPA as long as they stay organized.
Know exactly where your driving stands
Our free checker looks at your income, state, mileage situation, and setup — then tells you exactly what you owe and what to do next.
Get my free rideshare tax check →