Can Uber Drivers Claim Mileage on Taxes?

As the gig economy expands, many individuals earn income through platforms like Uber. Understanding the tax implications of this work, particularly regarding deductible expenses, is crucial. For Uber drivers, vehicle mileage is a significant deduction that can substantially reduce taxable income. Claiming these expenses requires careful attention to IRS guidelines.

Eligibility for Mileage Deductions

Uber drivers are classified as independent contractors, or self-employed individuals, for tax purposes, rather than employees. This classification allows them to deduct legitimate business expenses, including vehicle mileage, on their tax returns. If an individual were an employee, unreimbursed business expenses like mileage would not be deductible.

Business mileage includes miles driven while online and waiting for a ride request, driving to pick up a passenger, driving with a passenger, and returning from a drop-off to a common area for new requests. Miles driven for personal errands or commuting from home to a general driving area are generally not deductible.

For instance, if an Uber driver starts their day from home and drives to their first customer, and then drives from their last customer back home, these initial and final segments are considered non-deductible commuting miles. However, driving between two different work locations or to a temporary work site is deductible.

Methods for Claiming Mileage

There are two primary methods for independent contractors to claim vehicle expenses: the standard mileage rate method and the actual expense method. Drivers should evaluate both options to determine which provides the largest deduction.

The standard mileage rate involves deducting a set amount for each business mile driven, a rate which the IRS adjusts annually. For 2025, the business standard mileage rate is 70 cents per mile. This rate is designed to cover various vehicle-related costs such as depreciation, gas, oil, repairs, insurance, and maintenance. However, business-related tolls and parking fees are separate deductions that can be claimed in addition to the standard mileage rate.

Alternatively, the actual expense method allows drivers to deduct the actual costs of operating their vehicle for business purposes. This includes expenses like gasoline, oil, tires, repairs, insurance premiums, registration fees, and a portion of the vehicle’s depreciation or lease payments. To use this method, drivers must calculate the percentage of their vehicle’s use that was for business and apply that percentage to their total vehicle expenses. For example, if a car was used 70% for business, then 70% of all actual vehicle expenses could be deducted.

Choosing between the two methods has implications for future tax years. If a driver uses the standard mileage rate in the first year a car is placed in service for business, they can switch to the actual expense method in later years and then alternate between the two. However, if the actual expense method is chosen in the first year, the standard mileage rate generally cannot be used for that specific vehicle in subsequent years. For leased vehicles, if the standard mileage rate is chosen, it must be used for the entire lease period.

Keeping Mileage Records

Recordkeeping is fundamental for claiming vehicle expense deductions, regardless of the method chosen. The IRS requires detailed and accurate records to substantiate all claimed business mileage. Without proper documentation, deductions may be disallowed during an audit.

For each business trip, drivers must record specific information. This includes the date of the trip, the total mileage driven, the destination, and the business purpose. For instance, an entry might specify “August 1, 2025, 15 miles, Passenger pick-up and drop-off from Main St. to Elm Ave., Uber ride.” It is also advisable to record the odometer reading at the beginning and end of the tax year.

While paper logbooks are acceptable, many drivers find mileage tracking apps or digital spreadsheets more efficient for maintaining contemporaneous records. These tools can automate the tracking process and help ensure all necessary details are captured. For those using the actual expense method, retaining receipts for all vehicle-related expenditures, such as gas, oil changes, and repairs, is essential. Records should be kept for at least three years, and up to seven years, to align with typical audit periods.

Reporting Mileage on Your Tax Return

Uber drivers, as self-employed individuals, report their business income and expenses on Schedule C, Profit or Loss from Business, when filing their federal income tax return (Form 1040). This form is where the mileage deduction is officially claimed.

On Schedule C, car and truck expenses are reported on Line 9. If using the standard mileage rate, the total calculated deduction is entered here. If opting for the actual expense method, the sum of all qualifying vehicle expenses, including depreciation or lease payments, is reported. Any separate deductions for business-related tolls and parking fees, allowed under both methods, are also included.

Schedule C also includes Part IV, for providing information about the vehicle used for business. This section asks for details such as the date the vehicle was placed in service for business use and total mileage. The net profit or loss from the business, derived from Schedule C after deducting all eligible expenses, then flows to the individual’s main Form 1040, impacting their overall taxable income.