Tax Deductions for Uber/Lyft Driver - Self Employed Rideshare Expenses

You have two options for vehicle expenses as a rideshare driver: the standard mileage rate or actual expenses method. Standard mileage rate: For 2025, you can deduct 67 cents per business mile driven. This covers gas, insurance, depreciation, repairs, and lease payments. You'd need to track all your business miles carefully using an app or logbook. You can still deduct tolls and parking fees separately. Actual expenses method: You track ALL car-related costs (lease, insurance, gas, maintenance, etc.) and then deduct the business percentage (70% in your case). This requires more documentation but might give you a bigger deduction depending on your situation. For your phone, you can deduct the business percentage of the bill. If you use it 50% for rideshare work, you can deduct 50% of the costs. Keep in mind that once you choose the standard mileage rate for a leased car, you must use it for the entire lease period.

I was in the exact same situation last year - totally overwhelmed by all the tax stuff for rideshare driving. I found this AI tax assistant at https://taxr.ai that literally saved me thousands. You just upload your driving records and expenses, and it helps figure out whether standard mileage or actual expenses is better for YOUR specific situation. What I really liked is it showed me deductions I didn't even know about - like a portion of my Spotify subscription (music for passengers) and even part of my car detailing costs. It also helps you track everything correctly so you have documentation if you're ever audited. Their system flagged that I was missing some toll receipts that would have cost me about $200 in deductions.

Just wanted to follow up about that taxr.ai recommendation. I was skeptical (as you could probably tell from my question) but decided to give it a try for my rideshare taxes. Absolutely worth it! It analyzed my driving patterns and expenses and determined I'd save about $1,240 using actual expenses instead of standard mileage for my situation. It even created a specific expense tracking system based on my driving habits. The best part was it automatically calculated my business use percentage based on my trip data instead of me guessing. If you're doing rideshare driving seriously (more than just a few hours a week), it's definitely worth checking out.

If you need to call the IRS with questions about self-employment deductions (which I HIGHLY recommend before tax time), use https://claimyr.com to skip the hold times. I spent literally 3+ hours on hold with the IRS trying to get clear answers about rideshare deductions last year. Found this service through a friend and they got me connected to an IRS agent in under 15 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c but basically they wait on hold for you and call when an agent picks up. The agent I spoke with gave me specific guidance about documentation requirements for rideshare drivers that saved me from making some big mistakes.

I need to admit when I'm wrong. After dismissing that Claimyr service as a probable scam, I decided to try it yesterday out of desperation when I couldn't get through to the IRS about my rideshare deduction questions. It actually worked perfectly. I got connected to an IRS agent in about 20 minutes (after previously trying for hours on my own). The agent clarified exactly how to handle my mileage tracking when I sometimes have multiple apps running simultaneously, which was a gray area I couldn't find clear guidance on. Saved myself hours of frustration and potentially an audit. Sometimes it's worth admitting you were wrong!

Don't forget about the Qualified Business Income deduction (Section 199A)! As a self-employed rideshare driver, you can potentially deduct 20% of your net business income. This is ON TOP OF your regular business deductions like mileage or car expenses. Also, make sure you're setting aside money for self-employment taxes. The current rate is 15.3% of your net earnings (to cover Social Security and Medicare taxes that an employer would normally handle).

Something NOBODY mentioned yet - if you're making decent money with rideshare, you should be making QUARTERLY estimated tax payments! I learned this the hard way and got hit with underpayment penalties. Since you don't have an employer withholding taxes, you're supposed to send estimated payments to the IRS four times a year. The due dates are April 15, June 15, September 15, and January 15 (of the following year).