Can Delivery Drivers Write Off Gas and Other Costs?

Delivery drivers, often operating as independent contractors, face unique tax considerations compared to traditional employees. Understanding tax deductions can significantly reduce taxable income and lower tax liabilities. As self-employed individuals, drivers must meticulously track income and expenses. Properly accounting for business costs allows them to take advantage of available tax benefits, ensuring a substantial portion of earnings remains with the driver.

Deductible Business Expenses for Delivery Drivers

Gas is a primary deductible expense for delivery drivers, part of broader vehicle-related costs. Beyond fuel, many other vehicle operating expenses can be claimed. These include maintenance and repairs like oil changes and new tires. Insurance premiums, vehicle registration fees, and lease payments or depreciation (if owned) are also deductible. Tolls and parking fees are additional business expenses.

Delivery drivers can also deduct various non-vehicle business expenses. A portion of cell phone expenses, reflecting business use for navigation and communication, is deductible. Costs for specialized equipment like insulated bags or blankets, essential for maintaining food temperature, are deductible. Fees charged by delivery applications, often called platform commissions, can be written off. If a dedicated home space is used exclusively and regularly for administrative tasks, a home office deduction may apply.

Calculating Your Vehicle Expenses

Delivery drivers have two main methods for deducting vehicle expenses: the standard mileage rate or the actual expense method. The standard mileage rate offers a simplified approach, allowing a fixed amount per mile driven for business. For 2025, this rate is 70 cents per mile, covering costs such as gas, oil, maintenance, and depreciation. This method is easier to track as it primarily requires logging business miles. However, if the actual expense method was used previously for the vehicle, the standard mileage rate cannot be chosen for that same vehicle.

Alternatively, the actual expense method involves tracking and deducting all specific costs associated with operating the vehicle for business. This includes actual expenses for gasoline, oil, repairs, insurance premiums, and vehicle registration fees. Drivers can also deduct depreciation if they own the vehicle or the business-use portion of lease payments. Only the percentage of expenses directly attributable to business use is deductible; personal use portions are not.

Choosing between these two methods depends on factors like annual mileage and actual vehicle operating costs. Drivers with high mileage or older, less fuel-efficient vehicles may find the standard mileage rate more advantageous due to its simplicity and comprehensive coverage. Conversely, drivers with newer, more expensive vehicles or significant repair costs may benefit more from the actual expense method if their actual costs exceed the standard rate. The record-keeping burden is also a consideration, as the actual expense method demands more detailed documentation.

Maintaining Accurate Records

Maintaining meticulous records is essential for all claimed deductions, particularly for vehicle expenses. These records serve as substantiation for deductions in case of an IRS audit. Without proper documentation, the IRS may disallow claimed expenses, potentially leading to additional tax liabilities, penalties, and interest. Drivers should keep organized records for at least three years, as the IRS can audit returns within this period.

Essential records include detailed mileage logs for all business-related travel. These logs should accurately record the date, destination, business purpose, and starting and ending odometer readings. Receipts for all actual expenses, such as gas purchases, vehicle repairs, and insurance payments, must be retained. Bank statements and any other relevant documentation supporting claimed deductions should be kept. Practical record-keeping methods range from mobile applications for mileage and expense tracking to spreadsheets or physical folders for receipts.

Reporting Your Deductions on Your Tax Return

Delivery drivers are considered independent contractors, reporting income and expenses differently than traditional employees. Business activities are reported on Schedule C (Form 1040), “Profit or Loss From Business.” On this form, drivers list gross income from delivery services, often reported on Form 1099-NEC. Deductible business expenses, whether calculated using the standard mileage rate or actual expenses, are entered on Schedule C to determine the net profit or loss. Accurate reporting of all income received, even without a 1099-NEC form, is a tax obligation.

The net profit calculated on Schedule C is then transferred to Form 1040. This net profit is also subject to self-employment tax, covering Social Security and Medicare contributions. The self-employment tax rate is 15.3%, consisting of 12.4% for Social Security and 2.9% for Medicare. Half of the self-employment tax paid can be deducted from gross income, further reducing taxable income.