Tax Deductible Expenses for Rideshare Drivers and Food Couriers
Navigating the world of taxes as a gig driver can be overwhelming, but taking advantage of deductible business expenses can significantly reduce your taxable income. When it comes to common deductible expenses, keep in mind that almost any ordinary and necessary cost for the operation of your gig business can potentially save you money come tax time.
Companies will report to the IRS the gross (total) income or revenue paid to you. The IRS will expect you to pay taxes on that amount, unless you track and document expenses you're allowed to deduct and are considered reasonable for operating your business.
For gig drivers looking to maximize deductions and minimize taxes, understanding what is deductible and maintaining good documentation are the keys to success. Staying vigilant about tracking these expenses is fundamental for streamlining the tax filing process and substantiating your claims on a tax return.
Expenses, Fees and Taxes
Your company will likely report a gross revenue amount for the total ride, then deduct amounts they charge to provide their service to you. These deductions are often detailed under expenses, fees, and taxes. These deductions can all be deducted from your Gross Pay as expenses to get to your Net Payout.
Vehicle Expenses
For gig drivers, vehicle expenses often represent the largest share of deductible business costs. You have two options for claiming vehicle expense deductions: tracking actual vehicle expenses or using the standard mileage rate provided by the IRS.
The actual expenses method includes all costs associated with operating your vehicle for business purposes, such as gas, maintenance, repairs, vehicle insurance, and loan payments (taken as depreciation and interest) or lease payments. You must keep detailed records and receipts for all these expenses to claim them on your tax return. This method can be complicated but advantageous if the actual expenses outweigh the amount you'd claim using the standard mileage rate.
On the other hand, the standard mileage rate simplifies record-keeping. In 2025, the IRS has increased this rate from 67 cents per mile to 70 cents per mile for every business mile driven. This rate is designed to account for the costs mentioned above without the need for detailed logs. However, you must still document the dates of business trips, mileage, and purpose of the travel to use this method.
Deduction Method | Requirements | Notes |
Standard Mileage | Tracking total business miles driven | Cannot claim actual car expenses |
Actual Expenses |
| To arrive at your deductible expense, multiply your total expenses by your percentage used for business miles |
Other Business Expenses
Outside of vehicle expenses, there are still numerous opportunities to lower your taxable income through other business deductions. A variety of business-related expenses are deductible, such as parking fees, tolls, and supplies provided to passengers, like water bottles and candies or snacks. Items needed for your day-to-day operations, such as a quality mobile phone plan, can also be deductible Don't forget, if you've opted for a roadside assistance plan for those just-in-case scenarios, this too can be deductible.
However, not every expense can be written off. Clothes, meals, and entertainment are not considered ordinary and necessary business expenses and must be handled separately. Similarly, while health insurance is a crucial expense, it may not fall under business expenses for tax purposes, unless it is a plan specifically for your business.
In keeping with IRS requirements, maintaining comprehensive logs and receipts for both vehicle-related and other business expenses is paramount for successful deductions. It's recommended to use a mileage tracking app or a well-organized spreadsheet to make sure nothing slips through the cracks and to ease the burden during tax season.
Summary of Common Deductions
Standard mileage deduction (currently 70 cents per mile in 2025)
Vehicle Expenses (If you aren’t using the standard mileage deduction)
Platform Fees
Phone & Internet (When used for your business)
Supplies Provided to Passengers
Washing & Cleaning
Parking
Tolls
Subscriptions
Satellite Radio
ATBS Services
Gig drivers have unique tax obligations that need to be understood and managed effectively. ATBS Ride was designed to eliminate the headache of numbers and paperwork, allowing you to focus on your gig instead of taxes bookkeeping. Want to learn more? Click here to simplify your life.