Does Uber Reimburse for Mileage Costs?

Driving for Uber comes with various expenses, with fuel and vehicle wear and tear among the biggest. Many drivers wonder whether Uber helps cover these costs or if they are solely responsible. Understanding how these expenses are handled can significantly impact a driver’s earnings.

Whether Uber Covers Mileage Costs

Uber does not reimburse drivers for mileage costs since they are independent contractors, not employees. This means drivers must cover fuel, maintenance, insurance, and depreciation themselves. Instead of direct compensation, Uber incorporates these costs into its fare structure through base fares, per-mile rates, and per-minute rates. However, earnings fluctuate based on location, demand, and Uber’s pricing model.

In 2022, Uber introduced a temporary fuel surcharge to offset rising gas prices, adding a small fee—typically between $0.45 and $0.55—to each trip. While this provided some relief, it was not a direct mileage reimbursement and was phased out in most areas.

Uber offers promotions such as Quest and Boost, which provide bonuses for completing a set number of rides or driving during high-demand periods. While these incentives can increase earnings, they are performance-based and not intended to cover mileage costs.

Uber Pro, the company’s rewards program, offers discounts on fuel, vehicle maintenance, and rental cars for drivers who reach higher status tiers. While these perks help reduce expenses, they do not replace direct reimbursement for miles driven.

Differences Between Reimbursement and Deductions

Reimbursement and tax deductions both help offset business expenses but function differently. Reimbursement involves an employer or client directly covering costs incurred during work. This typically requires submitting expense reports, and the payment received is not taxable income. Some companies follow IRS guidelines, such as the 2024 standard mileage rate of 67 cents per mile, when reimbursing employees for vehicle-related expenses.

Deductions, by contrast, reduce taxable income rather than providing direct compensation. Since Uber drivers are independent contractors, they can deduct mileage expenses when filing taxes. The IRS allows self-employed individuals to choose between the standard mileage deduction or actual vehicle expenses. The standard mileage deduction simplifies recordkeeping, while the actual expense method requires tracking all vehicle-related costs but may yield a larger deduction if expenses are high.

Recordkeeping for Tax Purposes

Accurate recordkeeping is essential for Uber drivers to maximize deductions and avoid tax issues. The IRS requires proper documentation to substantiate business expenses, and without detailed records, deductions may be disallowed in an audit.

A well-maintained mileage log is crucial. The IRS requires logs to include the date, starting and ending odometer readings, total miles driven, and the business purpose of each trip. Apps like Stride, Everlance, and MileIQ can automate this process, while manually recorded logs must be precise, as estimates or incomplete records may not hold up under IRS scrutiny.

Beyond mileage, drivers should keep receipts for fuel, oil changes, tire replacements, and car washes. Digital copies stored in cloud-based systems like Google Drive or Dropbox serve as backup documentation. Bank and credit card statements alone are insufficient unless supported by itemized receipts detailing each expense.