What Deductions Can I Take as a Rideshare Driver (Uber, Lyft, etc.)?

If you drive for Uber, Lyft, or another rideshare platform, you're generally considered an independent contractor. That means you're responsible for reporting your income, paying self-employment taxes, and keeping records of your business expenses.

The good news is that you may be able to deduct many of the ordinary and necessary expenses you incur while operating your rideshare business. Taking all eligible deductions can help reduce your taxable income and lower your overall tax bill.

For most rideshare drivers, vehicle expenses are the largest deduction available.

You generally have two options:

You must keep a mileage log regardless of which method you choose. Your records should include:

The standard mileage rate allows you to deduct a set amount for each business mile driven.

This method is often simpler because the rate already includes many vehicle-related costs, such as:

If you use the standard mileage method, you generally can't separately deduct those same vehicle expenses.

Instead of using the standard mileage rate, you may choose to deduct the business portion of your actual vehicle expenses.

Common actual expenses include:

If you use actual expenses, only the percentage attributable to business use may be deducted.

If you lease your vehicle, you may be able to deduct the business-use portion of your lease payments.

Within the program, report lease payments under:

Federal → Income → Profit or Loss From Business (Schedule C) → General Expenses → Rent or Lease of Property

Be sure to prorate the expense based on your business-use percentage.

If you own your vehicle, you may be eligible to claim depreciation. Depreciation allows you to recover the cost of the vehicle over time through annual deductions.

Within the program, depreciation is entered through the vehicle asset section on Schedule C.

Your smartphone is often essential for accepting rides, using navigation, communicating with passengers, and managing your rideshare account.

Because of that, you may deduct:

If you use a separate phone exclusively for your rideshare business, the entire cost may be deductible.

If you financed your vehicle, the business-use portion of the interest paid on the loan may be deductible. Only the percentage related to business use can be claimed.

In some situations, vehicle registration fees may be deductible as part of your actual vehicle expenses. If you choose the standard mileage method, these fees generally cannot also be deducted as actual vehicle expenses.

If you use the actual expense method, you may deduct the business portion of expenses necessary to keep your vehicle operating safely and efficiently.

Examples include:

These expenses aren't separately deductible if you're using the standard mileage rate.

If you use the actual expense method, you may deduct the business portion of your auto insurance premiums.

Drivers who use the standard mileage rate generally cannot separately deduct insurance costs that are already factored into that rate.

Some rideshare drivers provide bottled water, snacks, or similar refreshments to passengers. These costs may be deductible as a business expense. In general, only 50% of the cost of food and beverages provided in connection with the business is deductible.

Your vehicle is the face of your rideshare business.

Expenses paid to keep your vehicle clean and presentable, such as:

may qualify as ordinary and necessary business expenses.

If you purchased a roadside assistance membership, such as AAA, specifically because of your rideshare business, the business-related portion may be deductible.

Parking fees and tolls incurred while actively conducting business are generally deductible.

Examples include:

Be sure to keep receipts or electronic records whenever possible.

The IRS expects self-employed individuals to maintain adequate records supporting their deductions.

Consider keeping:

If a receipt doesn't clearly explain the business purpose, make a note showing:

Good documentation can help support your deductions if the IRS requests additional information.

To enter non-vehicle expenses:

Enter expenses such as:

To enter actual vehicle expenses or depreciation:

This area is used to report vehicle information, depreciation, mileage, and other vehicle-related expenses.