Driving for Uber or Lyft means you're running your own business — which means you handle your own taxes. No withholding, no W-2, and a tax bill that surprises most new drivers in their first April. This guide covers everything you need to know about rideshare taxes in 2025 so you're never caught off guard.
What tax forms will you receive?
As a rideshare driver, you'll receive one or more 1099 forms from Uber or Lyft each January:
- 1099-K — if you received $20,000 or more and had 200+ transactions via the platform's payment processing. This reports gross ride payments.
- 1099-NEC — for bonuses, incentives, referral payments, or other non-ride compensation of $600 or more.
If you earned less than these thresholds, you won't receive a 1099 — but you're still legally required to report all income. The IRS expects you to track and report every dollar regardless of whether you get a form.
What taxes do rideshare drivers pay?
You'll owe two types of federal tax on your rideshare income:
Self-employment tax (15.3%)
Because you're self-employed, you pay both the employee and employer halves of Social Security and Medicare. The combined rate is 15.3%, applied to 92.35% of your net earnings. For most drivers, this is the single biggest tax — and the one that catches people off guard if they've only ever been W-2 employees.
Federal income tax
On top of SE tax, you pay ordinary income tax on your net rideshare profit. The rate depends on your total income from all sources. The good news: you can deduct half of your SE tax from your gross income, which softens the income tax hit somewhat.
The biggest deduction: mileage
Mileage is the most valuable deduction available to rideshare drivers — and the one most drivers underuse by not tracking carefully. In 2025, the IRS standard mileage rate is $0.70 per mile. Every business mile you drive reduces your taxable income by 70 cents.
What miles count?
- Miles driven with a passenger in the car
- Miles driving to pick up a passenger after accepting a request
- Miles driving between rides while the app is on and you're available
- Miles to pick up supplies, car washes, or other business errands
Miles driven with the app off — commuting to your "starting area" or driving home at the end of the night — generally don't count.
Other deductions rideshare drivers can claim
| Deduction | What qualifies | Notes |
|---|---|---|
| Mileage | All business miles at $0.70/mile | Usually the biggest deduction |
| Phone | Business portion of your phone bill | If you use your phone 80% for work, deduct 80% |
| Phone mount | Holder for navigation | Fully deductible |
| Car washes | Cleaning to maintain passenger comfort | Keep receipts |
| Water/snacks for passengers | Amenities you provide | Fully deductible business expense |
| Platform fees | Uber/Lyft commission on each ride | Deduct from gross 1099 income |
| Tolls | Tolls paid during rides | Track separately from mileage |
| Parking | Business parking fees | Not commuting-related parking |
| Health insurance | Premiums if self-employed | Above-the-line deduction |
Quarterly estimated tax payments
Rideshare drivers must pay taxes four times a year — not just in April. If you expect to owe $1,000 or more in federal taxes for the year, the IRS requires quarterly estimated payments. Skipping these triggers an underpayment penalty even if you pay everything by April 15.
| Quarter | Income covered | Due date |
|---|---|---|
| Q1 | Jan 1 – Mar 31 | April 15, 2025 |
| Q2 | Apr 1 – May 31 | June 16, 2025 |
| Q3 | Jun 1 – Aug 31 | September 15, 2025 |
| Q4 | Sep 1 – Dec 31 | January 15, 2026 |
How much should you set aside?
A practical rule for rideshare drivers: set aside 25–30% of every payment into a separate savings account labeled "taxes." Move it immediately when the money hits your account — before you spend it on anything else.
The exact percentage depends on your total income from all sources, your deductions, and your filing status. For most drivers earning $30,000–$70,000 from rideshare, 25–28% covers federal taxes comfortably. Add your state income tax rate on top if applicable.
How to file your rideshare taxes
You'll file your rideshare income on Schedule C (business income and expenses) attached to your Form 1040. Your self-employment tax is calculated on Schedule SE. Most tax software handles both automatically once you enter your 1099 income and deductions.
At minimum, you'll need: your annual earnings summary from the Uber or Lyft driver app, your 1099 forms, your mileage log for the year, and receipts for any expenses you're deducting.
The most common rideshare tax mistakes
- Not tracking mileage in real time. Reconstructing a year of driving from memory is nearly impossible. Use a tracking app from day one.
- Reporting gross 1099-K income without deducting platform fees. Your 1099-K shows what riders paid — subtract Uber/Lyft's commission before calculating your taxable income.
- Skipping quarterly payments. The penalty applies per quarter — you can owe it even if you pay everything in April.
- Not setting money aside. The most painful mistake is having nothing saved when April comes. Automate a 25% transfer to a separate account with every deposit.
- Forgetting the SE tax deduction. You can deduct half of your SE tax from gross income — most tax software does this automatically, but verify it's applied.
Rideshare driver tax checklist
- ✓ Download your annual earnings summary from the driver app
- ✓ Collect 1099-K and 1099-NEC forms (available in the app by late January)
- ✓ Export your mileage log for the full year
- ✓ Total up platform fees (visible in your earnings summary)
- ✓ Gather receipts for phone, car washes, accessories, tolls
- ✓ Calculate quarterly payments you've already made (check your records or IRS.gov)
- ✓ File Schedule C + Schedule SE with your Form 1040