Whether you drive full-time or pick up passengers on evenings and weekends, rideshare driving comes with expenses that can add up quickly. Gas, vehicle maintenance, insurance, and other costs can take a significant bite out of your earnings.
The good news is that eligible rideshare drivers can deduct certain business expenses on their federal tax returns. Knowing which expenses qualify – and keeping the right records throughout the year – can help you reduce your taxable business profit and avoid paying more tax than necessary.
At Bounds Accounting & Tax Services, we believe that understanding your tax deductions is an important part of managing your finances. Here are five rideshare tax deductions you might be missing but shouldn’t overlook.
1. Vehicle Expenses: Mileage or Actual Costs
Your vehicle is one of your most important business tools as a rideshare driver. Fortunately, there are two primary methods for deducting eligible vehicle expenses: the standard mileage method and the actual expense method.
The standard mileage method
With the standard mileage method, you deduct eligible business miles driven using the IRS mileage rate for the applicable tax year.
Business mileage may include driving to pick up passengers, transporting passengers to their destinations, and certain other business-related driving. However, not every mile you drive automatically qualifies. Personal trips and ordinary commuting generally don’t count as deductible business mileage.
For the 2026 tax year, make sure you use the IRS standard mileage rate applicable to 2026 rather than an outdated rate from a previous year.
The actual expense method
Alternatively, you may be able to deduct the business-use portion of eligible vehicle expenses, including:
- Gasoline and oil
- Repairs and maintenance
- Tires and other vehicle-related costs
- Insurance
- Vehicle registration fees
- Depreciation or eligible lease expenses
If you use your vehicle for both business and personal purposes, you generally must allocate expenses based on your business use.
Which method is better? It depends on your vehicle, your expenses, your business mileage, and the applicable tax rules. In some situations, the standard mileage method is simpler. In others, the actual expense method may produce a larger deduction.
There are also restrictions on switching between methods, particularly for owned vehicles, so it’s important to understand the rules before choosing.
Money-saving tip: Keep a mileage log throughout the year. Record your dates, destinations, business purpose, and miles driven. A reliable mileage-tracking app can make this process much easier.
2. Phone Bills and Mobile Data
If you drive for a rideshare company, your smartphone is more than a convenience. It’s often essential for accepting ride requests, navigating to passengers, communicating with riders, and managing your driving schedule.
That means you may be able to deduct the business-use portion of your phone expenses.
Potentially deductible costs include:
- Monthly mobile phone service
- Mobile data plans
- Business-use portions of phone equipment
- Certain accessories used for work, such as eligible mounts or charging equipment
The key is determining how much of the expense is attributable to your rideshare business.
For example, if you use your phone 60% of the time for rideshare business and 40% for personal activities, you generally cannot automatically deduct the entire bill. You would need a reasonable basis for allocating the business portion.
The same principle applies if you purchase a new phone primarily to support your rideshare work. The appropriate deduction may depend on how the device is used and the applicable depreciation or expense rules.
Don’t overlook this deduction: Review your phone bills and other eligible technology expenses before filing your return. Small monthly costs can add up over an entire year.
3. Tolls, Parking Fees, and Certain Travel Expenses
Rideshare drivers frequently encounter tolls and parking charges while working. Depending on the circumstances, these costs may qualify as business expenses.
Examples may include:
- Tolls incurred during eligible business driving
- Parking fees associated with business activities
- Certain airport or pickup-related fees that you personally pay and that are not reimbursed
However, you need to distinguish between expenses you pay yourself and amounts that are reimbursed or paid by the rideshare platform.
You also need to avoid deducting the same expense twice. For example, if a cost is already included in another deduction or reimbursed to you, it should not be claimed again.
When using the standard mileage method, certain vehicle operating expenses are generally covered by the mileage rate. Parking fees and tolls related to business use may be deductible separately, subject to the applicable rules. Personal parking tickets and fines are not deductible business expenses.
Practical tip: Keep digital copies of toll statements, parking receipts, and relevant platform records. If you drive regularly, these smaller expenses can become meaningful over the course of the year.
4. Cleaning Supplies and Vehicle Accessories
Keeping your vehicle clean, safe, and comfortable is important when transporting passengers. Fortunately, some expenses related to maintaining your rideshare vehicle may qualify as business deductions.
Depending on your circumstances, potentially deductible expenses may include:
- Cleaning supplies used for your rideshare vehicle
- Car washes related to maintaining the vehicle for business use
- Eligible protective accessories and equipment
- Phone mounts and charging equipment
- Certain supplies used specifically for your rideshare activity
The business purpose of the expense matters. A cost that primarily benefits your personal use of the vehicle may not qualify, and mixed-use expenses may need to be allocated.
You should also be careful about how vehicle expenses are handled if you use the standard mileage method. Costs that are already covered by the mileage rate generally cannot be deducted again as separate vehicle operating expenses.
For example, ordinary vehicle cleaning and maintenance expenses generally fall within the operating costs covered by the standard mileage rate. You should not assume that every car wash or maintenance receipt creates an additional deduction when using that method.
Keep receipts and records that explain what you purchased and how it relates to your rideshare business.
5. Tax Preparation Fees and Other Business Expenses
One deduction many independent contractors overlook is the business portion of professional fees and other ordinary, necessary expenses associated with their work.
Depending on your situation, potentially deductible expenses may include:
- The business portion of tax preparation fees
- Certain bookkeeping services
- Eligible business-related software or subscription costs
- Business-related supplies not already included in another deduction
- Certain required business expenses that you pay yourself and are not reimbursed for
For example, if you hire a tax professional to help prepare your business income and expense records, the portion of the fee attributable to your rideshare business may be deductible under the applicable rules.
Personal tax preparation costs generally are not deductible as an itemized personal expense under current federal law. However, qualifying business-related tax preparation and bookkeeping expenses may be deductible.
The important distinction is whether the expense is genuinely connected to your rideshare activity and meets the requirements for a business deduction.
A tax professional can help determine which costs qualify and how they should be reported.
Bonus Tip: Don’t Forget About Self-Employment Taxes
Rideshare drivers are generally treated as independent contractors rather than employees. This means you may be responsible for both income tax and self-employment tax on your net business earnings.
Self-employment tax generally covers Social Security and Medicare taxes. Depending on your income and other circumstances, you may also need to make estimated tax payments during the year.
The good news is that eligible business deductions can reduce your net profit, which may also reduce the amount of self-employment tax you owe. The actual effect depends on your overall tax situation.
You may also qualify for other tax benefits, such as the deduction for one-half of your self-employment tax or the qualified business income deduction, if you meet the applicable requirements.
These provisions have their own eligibility rules, so it is worth reviewing your complete tax situation rather than focusing exclusively on vehicle expenses.
Good Recordkeeping Is the Key to Maximizing Your Deductions
Even if you qualify for a deduction, you need adequate records to support it.
Throughout the year, maintain a system for tracking:
- Business and personal mileage
- Rideshare income and platform statements
- Vehicle expenses and receipts
- Phone and data costs
- Tolls, parking, and eligible supplies
- Professional fees and other business expenses
Many rideshare platforms provide annual summaries, but those reports may not include every expense you paid out of pocket. Review your records rather than relying exclusively on the platform’s tax documents.
It’s also important to understand that a Form 1099-K or Form 1099-NEC, when applicable, may not represent the exact amount of taxable profit from your rideshare business. Platform fees, adjustments, reimbursements, and other transactions may require additional review.
Good documentation helps you identify eligible deductions, calculate your net business income accurately, and support the amounts reported on your tax return.
Let Bounds Accounting & Tax Services Help You Prepare for Tax Season
Driving for Uber, Lyft, or another rideshare service can create tax obligations that differ from those of a traditional employee. Understanding your deductible expenses, tracking your mileage, and planning for self-employment taxes can help you manage your earnings more effectively.
At Bounds Accounting & Tax Services, we help individuals and businesses navigate tax preparation and accounting with an emphasis on accurate reporting and informed financial decisions.
Whether rideshare driving is your full-time occupation or a source of supplemental income, taking time to organize your records and review your deductions can make a difference when tax season arrives.
Have questions about your rideshare taxes? Contact Bounds Accounting & Tax Services to discuss your tax preparation needs and learn how professional guidance can help you navigate the rules.
Tax disclaimer: This article provides general information about federal tax rules and is not individualized tax advice. Deduction eligibility depends on your circumstances, recordkeeping, vehicle use, and the tax rules applicable to the year in question. Consult a qualified tax professional for guidance specific to your situation.
