Uber and Lyft taxes for rideshare drivers

Rideshare drivers are self-employed in the eyes of the IRS. The forms you get can show a bigger number than what landed in your bank account, so it's worth understanding them before you file.

Your 1099-K and 1099-NEC

Rideshare platforms typically report ride fares on Form 1099-K and other pay, like referral bonuses and some promotions, on Form 1099-NEC. Payments that reach you through a card processor, payment app or marketplace are reported on Form 1099-K instead, generally once they pass $20,000 and 200 transactions in a year under federal rules (some states use lower thresholds). Starting with payments made in 2026, a client or platform only has to send you a Form 1099-NEC once it pays you $2,000 or more in a year (it was $600), under the One Big Beautiful Bill Act. The threshold is set to adjust for inflation after 2026.

Your 1099-K can show gross fares, including amounts the platform kept as its service fee. Your annual tax summary in the driver app breaks those fees out. Report the gross and deduct the fees, so your return still matches the form the IRS sees.

Either way, every dollar is taxable whether or not you get a form. Your own records are what count.

Tips

Tips are taxable income. For 2025 through 2028, the new "no tax on tips" deduction lets eligible workers deduct up to $25,000 of qualified tips from income tax (it phases out above $150,000 of modified AGI, $300,000 joint, and for the self-employed can't exceed your net profit from that work). It doesn't reduce self-employment tax. Treasury's list of tipped occupations includes a transportation and delivery group; check that your work is listed before claiming it.

Common write-offs

Mileage, including miles driving to pick up riders and between rides while online. 2026 rates: 72.5¢ through June 30, 76¢ from July 1.
Platform service fees and booking fees shown on your tax summary.
Tolls and parking while working, plus airport fees if you pay them.
The business share of your phone, plus car-cleaning supplies, water and snacks for riders.
Health insurance premiums you pay yourself (self-employed health insurance deduction), if you aren't eligible for an employer plan.
Retirement contributions to a SEP IRA or solo 401(k), which lower income tax (not self-employment tax).

How much to set aside

Example (an estimate, single filer, no other job, no state tax): you earn $30,000 in 2026 and drive 15,000 business miles, half before July 1. Your mileage deduction is about $11,138, so your profit is about $18,863. Federal income tax plus self-employment tax on that comes to roughly $2,780: about 15% of profit, but only 9% of what you were paid.

Platform fees you deduct lower your profit further. Add your state's income tax on top.

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Frequently asked questions

Why is my Uber 1099-K higher than what I earned?

It can include the full fare riders paid, before the platform's service fee and other charges. Report the gross amount and deduct those fees using your annual tax summary.

Do I pay self-employment tax on rideshare income?

Yes, on your profit after expenses like mileage, once your net earnings reach $400 for the year. It's 15.3% on most of your profit, on top of income tax.

Should I use actual car expenses instead of mileage?

Mileage is simpler and often better for fuel-efficient cars. Actual expenses can win with a costly car you drive almost only for work. You generally need to use the standard rate in a car's first business year to keep the option later.

Sources

Estimates and general information, not tax advice. Check with a tax professional for your situation.