Common tax deductions for US gig drivers

As a gig driver you're self-employed. Nobody withholds tax for you, but in exchange you can deduct the cost of doing the work — and for most drivers those deductions are worth thousands. Here's what actually counts, how to calculate it, and a full worked example.

1. The mileage deduction

For nearly every gig driver this is the single largest deduction on the return. The IRS lets you deduct a fixed amount per business mile driven, which is meant to cover fuel, wear, insurance, depreciation and maintenance in one number.

2026 standard mileage rates. 2026 has a mid-year change, so you need to split your log at 30 June:

Mid-year rate changes are unusual but not unprecedented — the IRS did the same in 2022. Confirm the current figures on irs.gov before you file, and make sure whatever tool you use applies the right rate to each half of the year.

To put that in perspective: a driver logging 20,000 business miles evenly across 2026 claims roughly $14,850 in mileage deductions. That's not money in your pocket — it's income you don't pay tax on. Self-employment tax alone falls by about $2,100 (15.3% of 92.35% of the deduction), and income tax falls too, by an amount that depends on your bracket.

Which miles count

Business miles are miles driven for work. For a gig driver that generally includes:

• Driving to pick up a passenger or an order
• Driving with the passenger or order on board
• Driving between deliveries during a shift
• Driving to a hotspot, airport queue or restaurant cluster to wait for requests
• Trips to buy supplies, get the car serviced, or visit your accountant

What generally doesn't count is commuting — driving from home to the place you start working, and back home at the end, even with the app on — and any personal driving. (The main exception is when your home office is your principal place of business; a tax professional can tell you if that applies.) The distinction matters, so it's worth reading our separate guide on what the IRS requires in a mileage log.

2. Standard mileage vs actual expenses

There are two ways to deduct vehicle costs and you must choose one per vehicle per year.

Standard mileage method

Multiply business miles by the IRS rate. That single figure replaces fuel, oil, tyres, repairs, insurance, registration and depreciation. You still deduct parking and tolls separately.

Best when: your car is relatively cheap to run, already paid off, or fuel efficient. Most delivery and rideshare drivers in ordinary cars come out ahead here — and the record-keeping is far lighter.

Actual expense method

Add up everything the car actually cost you for the year, then deduct the business-use percentage of it. If 70% of your miles were for work, you deduct 70% of the total.

Eligible costs include fuel, insurance, registration, repairs and maintenance, tyres, car washes, lease payments, and depreciation.

Best when: you drive an expensive, thirsty or heavily depreciating vehicle, or you had a very costly repair year. It requires keeping every receipt.

Either way, track your miles. You need the mileage log to calculate the business-use percentage for the actual expense method too — there's no version of this where not tracking helps you.

3. Phone and data

You can't do the job without a phone, so the business share of it is deductible. That covers your monthly plan, the handset itself, and accessories you use for work — mounts, chargers, cables, a power bank.

The key word is share. Unless you carry a second phone used only for driving, you deduct a reasonable business-use percentage. If roughly 60% of your usage is work, deduct 60% of the bill. Pick a defensible number, write down how you arrived at it, and apply it consistently.

4. Vehicle costs beyond mileage

If you're using the standard mileage rate, most car costs are already baked into it — don't double-count fuel or oil changes. But a few vehicle-related items sit outside the rate:

• Parking fees incurred while working
• Tolls on business trips
• Interest on a car loan, at your business-use percentage, if you own the vehicle
• Personal property or excise tax on the vehicle, at the business-use percentage

Under the actual expense method, fuel and maintenance move into the main calculation instead.

5. Supplies and equipment

Costs that are ordinary and necessary for the work are generally deductible, at the business-use share if you also use the item personally. Bigger purchases may need to be depreciated over several years rather than deducted at once. For delivery and rideshare that typically means:

• Insulated hot bags and drink carriers
• Phone mounts, chargers, power banks
• Dash cam
• Cleaning supplies, floor mats, seat covers
• Passenger amenities — water, mints, tissues, phone cables
• Umbrella, torch, high-vis vest
• Masks, sanitiser and other safety supplies
• Platform-required background checks, permits or inspections

Keep the receipts. These are individually small and collectively add up to a few hundred dollars for most drivers — enough to matter, and easy to lose track of if you don't capture them as you go.

6. Parking, tolls and fees

Deductible in full when incurred for work, and worth logging carefully because they're paid in small amounts and rarely leave a paper trail. Airport pickup fees, city congestion charges and parking garage fees during a shift all count.

Parking tickets and traffic fines do not. Penalties are never deductible.

7. Other commonly missed deductions

• Platform commissions and service fees — if the platform reports your gross earnings before its cut, the fees it withheld are a deductible business expense.
• Health insurance premiums — self-employed people can often deduct premiums for themselves and their family, subject to conditions.*
• Retirement contributions — a SEP-IRA or solo 401(k) can shelter a meaningful share of net profit.*
• Half of your self-employment tax — deductible against income tax.*
• Qualified tips — for 2025 to 2028, up to $25,000 of qualified tips can be deducted. Rideshare and app-delivery drivers are on the IRS list of eligible occupations, but tips must be voluntary and reported, you need a valid SSN, married couples must file jointly, and the deduction phases out above $150,000 of income ($300,000 joint).*
• Qualified business income (QBI) deduction — up to 20% of your net business profit, subject to limits, claimed on Form 8995.*
• Tax prep fees and accounting software for the business portion.
• Bank fees on an account used for the business.
• Home office — only if you have a space used regularly and exclusively for administering the business. This one has strict rules; most drivers won't qualify.

* Not business expenses. These don't go on Schedule C and don't lower your self-employment tax: health insurance, retirement contributions and half of SE tax are adjustments on Schedule 1; the tips deduction is claimed on Schedule 1-A; QBI is figured on Form 8995. They reduce income tax only, and each has its own conditions.

8. A full worked example

Meet a full-time delivery driver in 2026. She grossed $48,000 across two platforms and logged 23,000 business miles — 12,000 in the first half of the year and 11,000 in the second.

Her net business profit is $48,000 − $18,300 = $29,700. Self-employment tax is calculated on 92.35% of that:

Without tracking those 23,000 miles, her net profit would have been $46,760 instead of $29,700. The mileage log alone moved $17,060 off her business profit. That cuts her self-employment tax by about $2,410 ($17,060 × 92.35% × 15.3%). Her income tax falls as well, but by how much depends on things this example doesn't know.

Income tax on top of SE tax depends on your filing status, standard or itemised deduction, the QBI deduction, other household income, credits and state. This example isolates the business calculation; it is not a complete return. Figures are rounded to the nearest dollar.

A worked example like this needs a full year of dated records. TripTally logs each trip by GPS and prices it at the IRS rate for that day. Free on Android: your full year stays in view and exports as CSV. Optional Pro adds PDF reports.

What you can't deduct

Just as useful as the list of deductions is the list of things drivers try to claim and can't:

• Commuting miles — the drive from home to where you start working, and back home at the end, unless your home is your principal place of business.
• Traffic tickets and parking fines. Penalties are never deductible, even when incurred during a delivery.
• Everyday clothing. Work clothing is deductible only if the work requires it and it isn't suitable for everyday wear. A logo alone doesn't make an ordinary T-shirt deductible, and jeans and trainers don't qualify however much you wear them for work.
• Meals while driving alone. Buying yourself lunch mid-shift is a personal expense, not a business meal, regardless of the fact that you were working.
• The full cost of a personal phone or car — only the business-use share.
• Fuel and repairs on top of the standard mileage rate. Choosing the standard rate means those costs are already included. Claiming both is double-counting.
• Time you spent. Your own labour isn't a deductible expense; you're taxed on the profit that remains after real costs.

Keeping records that hold up

A deduction you can't substantiate is a deduction you may lose. The standard to aim for is a record made at or near the time (for mileage, a log kept up weekly counts), not reconstructed afterwards.

• Mileage: a per-trip log with date, miles, destination and business purpose, plus your odometer reading at the start and end of the year.
• Expenses: the receipt, the date, the amount, and what it was for. A photo is fine — thermal receipts fade within months, so capture them the day you get them.
• Mixed-use items: write down how you arrived at the business percentage and apply the same logic every year.
• Retention: keep records for at least three years from the filing date. Some situations extend that, and records supporting vehicle depreciation should be kept for as long as you own the vehicle plus the retention period.

If you use the actual expense method, you also need every fuel and repair receipt for the year plus the mileage log to compute business-use percentage — which is why most solo drivers find the standard rate both more generous and far less work.

9. How much to set aside

A common rule of thumb is to set aside 25–30% of your net profit — not gross earnings — for federal self-employment and income tax, plus whatever your state charges. If you expect to owe $1,000 or more for the year after withholding and credits, you generally need to make quarterly estimated payments (for 2026: April 15, June 15, September 15 and January 15, 2027). Withholding from a W-2 job counts toward this, and safe harbors based on last year's tax can protect you from an underpayment penalty.

The trap is setting aside a percentage of gross. On $48,000 gross with $18,300 in deductions, 30% of gross would be $14,400 sitting idle when the actual bill is far lower. Calculating from net profit gives you a realistic number and leaves your cash where it belongs.

Stop losing deductions you already earned

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Sources

1. IRS: Standard mileage rates
2. IRS Notice 2026-10 (rates from 1 January 2026)
3. IRS Announcement 2026-11, Internal Revenue Bulletin 2026-29 (rates from 1 July 2026)
4. IRS Publication 463: commuting and the standard mileage rate (ch. 4), recordkeeping (ch. 5)
5. IRS Publication 334: Tax guide for small business
6. IRS Topic 554: Self-employment tax
7. IRS: Instructions for Form 7206, self-employed health insurance deduction
8. IRS: One Big Beautiful Bill Act deductions for working Americans and seniors
9. IRS: Occupations that customarily and regularly received tips
10. IRS: Schedule 1-A, what to know about the new form
11. IRS: Qualified business income deduction
12. IRS: Estimated taxes
13. IRS Publication 505: Tax withholding and estimated tax

IRS pages checked 3 October 2026.

Related: How to track mileage for taxes · Best mileage tracker apps for gig drivers