If you drive for Uber or Lyft, the IRS treats you as a self-employed business owner, not an employee. That distinction matters at tax time because it means you can deduct ordinary and necessary expenses of running your driving business before you ever calculate what you owe. Most rideshare drivers leave hundreds or even thousands of dollars on the table simply because they don’t know what qualifies. Here is what you can actually write off in 2025.
Why Rideshare Driving Counts as a Business
The IRS classifies rideshare drivers as independent contractors who file a Schedule C. That means your Uber or Lyft earnings aren’t just wages — they’re business revenue, and every legitimate cost of generating that revenue reduces your taxable profit. This is true whether driving is your only income or a side hustle on top of a W-2 job.
The Two Ways to Deduct Your Vehicle
Your car is almost certainly your biggest deduction, and the IRS gives you two methods to calculate it. You must pick one method in the first year you use the car for business, and switching later has rules attached, so it’s worth understanding both.
Standard Mileage Rate
For 2025, you can deduct 70 cents for every business mile driven. Multiply your total rideshare miles — including the miles you drive to pick up a passenger, not just the miles with someone in the car — by the rate, and that’s your deduction. This method is simpler and works well if you don’t want to track every repair receipt.
Actual Expense Method
Instead of a flat rate, you total up gas, insurance, repairs, depreciation, registration, and lease payments, then multiply by the percentage of miles you drove for business. This can produce a bigger deduction for newer or more expensive vehicles, but it requires more detailed recordkeeping and locks you into actual expenses for that vehicle going forward.
Platform Fees and Commissions
Uber and Lyft take a cut of every fare before you get paid, along with booking fees and service fees. Those amounts never hit your bank account, but they’re still deductible business expenses — check your driver tax summary from each platform to find the total.
Phone, Data Plan, and Mount
You need a smartphone to accept rides, run navigation, and process payments, which makes it a legitimate business tool. If you use your phone for both personal and business purposes, deduct the business-use percentage of your monthly bill. A phone mount purchased for driving is deductible at 100%.
Car Washes, Supplies, and Passenger Amenities
Keeping your car clean directly affects your rider ratings and acceptance rates, so car washes and detailing are deductible. The same goes for supplies you provide passengers — bottled water, mints, phone chargers — and cleaning supplies you keep in the car between rides.
Parking, Tolls, and Airport Fees
Airport trip fees, toll charges incurred while driving passengers, and parking costs while working are all deductible. Keep receipts or toll statements since these add up quickly for drivers who work busy urban routes or airport runs.
Health Insurance if You Drive Full-Time
If rideshare driving is your primary income and you’re not eligible for an employer’s plan through a spouse, you may be able to deduct 100% of your health insurance premiums as a self-employed health insurance deduction, taken on your personal return rather than Schedule C.
What You Can’t Deduct
Commuting from home to the area where you start picking up passengers generally isn’t deductible, and if you use the standard mileage rate, you can’t also deduct gas, repairs, or depreciation separately — those are already baked into the rate. Traffic tickets and fines are never deductible regardless of method.
How to Track Everything
The IRS requires contemporaneous mileage records, meaning logs kept close to the time of the trip rather than reconstructed later. A mileage tracking app that logs GPS trips automatically is the easiest way to stay audit-ready, and you should keep digital or physical receipts for every other expense for at least three years.
Keeping Your Rideshare Earnings Organized
On top of solid mileage logs, it helps to keep your Uber and Lyft payouts in an account you don’t mix with everyday spending, so you can see at a glance what you’ve actually earned before expenses come out. Some drivers use a fee-free banking app like Chime for this, since it can make direct deposits available early and doesn’t charge monthly account fees. (Referral link — I may receive a reward if you open an account.)
Frequently Asked Questions
Can I deduct both mileage and gas? No — the standard mileage rate already includes fuel, maintenance, and depreciation. Choose either the standard rate or actual expenses, not both, for the same vehicle in the same year.
Do I need an LLC to claim these deductions? No. You can claim all of these deductions as a sole proprietor on Schedule C with no business entity required.
What if I drive for both Uber and Lyft? Combine the income and expenses from both platforms on a single Schedule C, since you’re operating one driving business regardless of how many apps you use.
Use our free business mileage calculator to see exactly what your driving is worth this year, and consult a licensed tax professional to confirm which deduction method fits your specific situation.