Tax Deductions for Rideshare and Delivery Drivers

Two Kinds of Deductions

Driver deductions fall into two groups, and the difference matters:

• Business expenses on Schedule C lower your net profit. Because both income tax and the 15.3% self-employment tax are figured from that profit, these deductions cut both taxes.
• Deductions on your Form 1040, such as the qualified business income or tips deductions, are subtracted after your profit is set. They lower income tax only.

That is why a dollar of business mileage is usually worth more than a dollar of a Form 1040 deduction.

Business Expenses (Schedule C)

1. Your vehicle: mileage or actual costs

This is the largest deduction for nearly every driver. You generally choose between the IRS standard mileage rate and the business share of your actual vehicle costs. For 2026 the standard rate is 72.5 cents per business mile from January 1 through June 30 and 76 cents from July 1 through December 31. The rate already covers gas, maintenance, repairs, insurance, and depreciation, so you can't deduct those separately if you use it.

Miles with a passenger or order, driving to a pickup, and moving between trips can count with good records. Commuting is never deductible: the IRS treats travel between home and your regular workplace as personal. The mileage vs. actual expense guide helps you pick a method, and the mileage deduction calculator estimates it.

2. Car costs you can add even with the mileage rate

IRS Publication 463 lets you deduct these on top of the standard mileage rate:

• Tolls and parking on business trips. Parking at your regular place of work counts as commuting and isn't deductible.
• Interest on your car loan, for the business-use share.
• Personal property tax on the car, for the business-use share.

The last two are easy to miss. If you drive 70% for business, 70% of the year's car-loan interest and vehicle property tax can generally go on Schedule C.

3. Platform fees and commissions

When the amount reported to you includes fees and commissions the app kept, those fees are a business expense. Your annual tax summary from each platform shows them. The 1099-K guide explains why this matters.

4. Phone, accessories, and supplies

• Phone and data plan: the business-use percentage only.
• Accessories: phone mounts, chargers, and cables used for driving work.
• Passenger and delivery supplies: water, tissues, insulated bags, drink carriers.

5. Actual-expense method only

If you use actual costs instead of the mileage rate, you deduct the business share of the car expenses IRS Publication 463 lists: depreciation or lease payments, gas, oil, tires, repairs, insurance, registration fees, licenses, and garage rent, plus tolls and parking. Keep every receipt along with your mileage log, since the business share comes from your miles.

Deductions on Your Form 1040

These lower federal income tax but not self-employment tax.

6. Half of your self-employment tax

You can deduct the employer-equivalent half of your self-employment tax as an adjustment to income on Schedule 1. Tax software does this automatically once Schedule SE is filled in.

7. Qualified business income deduction (up to 20%)

Sole proprietors may be able to deduct up to 20% of their qualified business income, claimed on Form 8995. You don't need to itemize. Income limits and other rules apply, and the deduction is figured after your other business deductions.

8. Self-employed health insurance

If you pay for your own health insurance, you may be able to deduct the premiums using Form 7206, which carries the amount to Schedule 1. It is generally not available for months when you could join an employer-subsidized plan through your own job or your spouse's, and it can't exceed your business profit.

9. Retirement contributions

Self-employed drivers can open a SEP IRA, a SIMPLE IRA, or a one-participant (solo) 401(k). Contributions are generally deductible, which lowers this year's income tax while saving for retirement.

10. Qualified tips (2025–2028)

Rideshare drivers and delivery people are on the IRS list of tipped occupations, so you may deduct up to $25,000 of qualified tips a year, limited to your net driving profit. Details are in the no tax on tips guide.

11. Car-loan interest on a new personal vehicle (2025–2028)

A separate new deduction covers interest on a loan for a vehicle bought for personal use: up to $10,000 a year, claimed on Schedule 1-A. The rules are strict:

• The loan was taken out after December 31, 2024, to buy a new vehicle (used cars and leases don't qualify).
• The vehicle had its final assembly in the United States, and you list its VIN on your return.
• It phases out above $100,000 of modified adjusted gross income ($200,000 on a joint return).

If you are self-employed and the same interest qualifies both as business interest (item 2) and under this deduction, IRS Publication 463 lets you choose whether to report it on Schedule C or Schedule 1-A, but you can't deduct the same amount twice.

What You Can't Deduct

• Commuting and personal trips.
• Everyday meals during a normal driving day; meal rules apply to travel away from home overnight.
• Traffic tickets and fines.
• Gas and repairs if you already use the standard mileage rate.

Quick Reference

To see how your deductions change the final number, run your figures through the 1099 tax calculator with deductions.