Gig Worker Tax Guide 2026: Don’t Miss These Deductions

If you drive for Uber, Lyft, DoorDash, Instacart, Grubhub, or any other gig platform, the IRS considers you a self-employed business owner. That single fact changes everything about how you file taxes. You don’t get a W-2. Nobody withholds income tax or FICA from your earnings. And if you don’t understand the rules, you’ll almost certainly overpay.

The flip side? As a business owner, you’re entitled to deductions that W-2 employees can only dream about. The biggest mistake gig workers make is paying taxes on their gross earnings—the total shown on their 1099—instead of their net profit after business expenses. For a full-time rideshare driver, the difference can easily be $5,000 to $10,000 in tax savings every year.

This guide covers everything you need to know about gig worker taxes for 2026: how self-employment tax works, what you can deduct, how to make quarterly payments, and how to stay out of trouble with the IRS. Whether you’re a full-time driver or picking up shifts on weekends, these rules apply to you. If you’re looking for tools designed specifically for gig workers, check out our gig worker solutions page.

1. The Gig Economy Tax Landscape: 1099-NEC vs. W-2

When you work a traditional job, your employer sends you a W-2 at the end of the year. That form shows your total wages and the taxes already withheld from each paycheck—federal income tax, Social Security, and Medicare. Your employer pays half of your Social Security and Medicare taxes on your behalf. You never see that money; it’s handled for you.

Gig work is different. Platforms like Uber, Lyft, DoorDash, and Instacart classify you as an independent contractor, not an employee. If you earn $600 or more from a single platform in a calendar year, that platform is required to send you a 1099-NEC (Non-Employee Compensation). This form reports your gross earnings—the total the platform paid you, before any expenses. The 1099-NEC replaced the old 1099-MISC Box 7 for reporting non-employee compensation beginning with the 2020 tax year.

Important: even if you earn less than $600 from a platform and don’t receive a 1099-NEC, you’re still legally required to report that income. The $600 threshold only determines whether the platform must file the form—not whether you owe tax.

As a self-employed individual, you report your gig income and expenses on Schedule C (Form 1040), titled “Profit or Loss from Business.” This is where every deduction in this guide gets reported. Your net profit from Schedule C flows to your Form 1040, where it’s subject to both income tax and self-employment tax.

If you drive for multiple platforms—say Uber and DoorDash—you may receive multiple 1099-NEC forms. You can combine all your gig income on a single Schedule C if it’s the same type of work (e.g., driving and delivery), or file separate Schedule Cs for meaningfully different business activities.

2. Self-Employment Tax: The 15.3% Reality

This is the tax that catches most new gig workers off guard. When you’re a W-2 employee, you pay 7.65% in FICA taxes (6.2% Social Security + 1.45% Medicare), and your employer matches that amount. When you’re self-employed, you pay both halves—the full 15.3%.

Here’s an important detail most guides skip: self-employment tax is calculated on 92.35% of your net self-employment income, not the full amount. This adjustment mirrors the fact that employers don’t pay FICA on their share of the tax. So if your Schedule C net profit is $50,000, your SE tax base is $50,000 × 0.9235 = $46,175, and your self-employment tax is $46,175 × 0.153 = approximately $7,065.

The Social Security portion (12.4%) only applies up to the annual wage base, which adjusts each year for inflation. Medicare tax (2.9%) has no cap—it applies to all net self-employment earnings. If your combined self-employment and wage income exceeds $200,000 (single) or $250,000 (married filing jointly), you also owe an additional 0.9% Medicare tax on the excess.

3. Quarterly Estimated Tax Payments

W-2 employees have taxes withheld from every paycheck. As a self-employed gig worker, nobody withholds anything for you, so the IRS expects you to pay taxes throughout the year in four installments using Form 1040-ES. These are called quarterly estimated tax payments, and they cover both income tax and self-employment tax.

If you expect to owe $1,000 or more in taxes for the year after subtracting withholding and credits, you’re generally required to make quarterly payments. Skip them, and you’ll face an underpayment penalty when you file your return—even if you pay everything you owe by April 15.

There are two “safe harbor” rules to avoid the penalty. You won’t owe a penalty if you pay at least 100% of your prior year’s total tax liability (110% if your adjusted gross income exceeded $150,000), or at least 90% of your current year’s tax liability—whichever is smaller. Many gig workers use the prior-year method because it’s easier to calculate.

Practical tip: Set aside 25–30% of each payout in a separate savings account. This covers both income tax and self-employment tax for most gig workers in middle tax brackets. Pay from that account each quarter using IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS).

4. The #1 Deduction: Mileage at 72.5¢ per Mile

For most gig drivers, mileage is the single largest deduction available. For 2026, the IRS standard mileage rate for business use is 72.5 cents per mile—up from 70 cents in 2025. If you drove 20,000 business miles in 2026, that’s a $14,500 deduction. For the full breakdown of the rate change, see our article on the 2026 IRS mileage rate increase.

Which Miles Count?

This is where many gig workers leave money on the table. Platforms like Uber and Lyft only report miles driven while a passenger is in the car. But the IRS allows you to deduct far more:

• Deadheading miles: Driving to a pickup location without a passenger or delivery. This is the most commonly missed deduction for rideshare drivers.
• Between-gig miles: Driving from one drop-off to the next pickup, or repositioning to a busier area while the app is on and you’re available for work.
• Supply runs: Driving to buy hot bags, phone mounts, car wash supplies, or other business necessities.
• Bank and post office trips: Going to the bank to deposit cash tips or mailing tax documents related to your business.

Capturing every mile: Deadheading, repositioning, and between-gig driving all count as business miles for the IRS. A dedicated mileage tracker like tiktraq runs in the background and automatically captures every business mile, including the full range of deductible drives. This can mean thousands of dollars in additional deductions. For details on what the IRS requires in your log, read our guide on how to create an IRS-proof mileage log.

5. Vehicle Expenses: Standard Mileage vs. Actual

The IRS gives you two methods for deducting vehicle expenses. You must choose one for each vehicle:

Key rule: You must choose the standard mileage method in the first year you use a vehicle for business if you want the option to use it in later years. If you start with the actual expense method and claim depreciation (MACRS), you generally cannot switch to the standard mileage rate for that vehicle later. You can, however, switch from standard mileage to actual expenses in subsequent years.

For most gig drivers with a reasonably fuel-efficient car, the standard mileage rate produces a larger deduction and requires far less paperwork. It’s the recommended starting point. Whichever method you choose, parking fees and tolls are deductible in addition to your vehicle expense deduction.

6. Phone and Data Plan Deduction

Your smartphone is an essential business tool—you literally cannot accept gig jobs without it. The IRS allows you to deduct the business-use percentage of your phone bill, data plan, and even the cost of the phone itself.

The business percentage is based on how much you use the phone for work versus personal use. If you estimate that 60% of your phone usage goes to gig apps, navigation, and communicating with customers, you can deduct 60% of your monthly phone and data bill. A phone plan that costs $100 per month would yield a $720 annual deduction at 60% business use.

If you purchase a phone specifically for work and use it exclusively for gig driving, you can deduct 100% of the purchase price and monthly plan. This is one reason some drivers carry a dedicated work phone. If the phone costs more than $2,500, you may need to depreciate it over several years rather than deducting the full amount in the year of purchase, though the de minimis safe harbor election often lets you expense it immediately.

7. Home Office Deduction for Gig Workers

Many gig workers don’t realize they may qualify for a home office deduction. If you use a specific area of your home regularly and exclusively for business activities—managing your gig schedule, tracking expenses, communicating with platform support, doing bookkeeping—it counts. The space doesn’t need to be an entire room; a dedicated desk in a corner qualifies, as long as it’s used only for business.

The IRS offers two calculation methods:

• Simplified method: $5 per square foot of home office space, up to 300 square feet. Maximum deduction: $1,500 per year. No need to track actual home expenses.
• Regular method: Calculate the percentage of your home used for business (office square footage ÷ total home square footage), then apply that percentage to your rent or mortgage interest, utilities, insurance, repairs, and depreciation.

Beyond the direct deduction, a home office has a powerful side benefit for gig drivers: when your home office qualifies as your principal place of business, all mileage from home to your first gig location (and from your last location back home) becomes deductible business mileage instead of non-deductible commuting. For a full-time driver, this can add 20–40 miles per day to your mileage deduction.

8. Health Insurance Deduction for Self-Employed

If you pay for your own health insurance and you’re not eligible for coverage through an employer (including a spouse’s employer plan), you can deduct 100% of your health, dental, and vision insurance premiums as a self-employed individual. This is an “above-the-line” deduction, meaning you claim it on Schedule 1 of your Form 1040 regardless of whether you itemize.

This deduction covers premiums for yourself, your spouse, and your dependents. The deduction cannot exceed your net self-employment income from the business under which the insurance plan is established.

If you’re buying coverage through the Health Insurance Marketplace (healthcare.gov), you can still take this deduction. Just be aware that you cannot claim both the self-employed health insurance deduction and the premium tax credit for the same premiums—but you can allocate between them to maximize your overall benefit. A tax professional can help you determine the optimal split.

9. Supplies and Gear

Anything you purchase that is “ordinary and necessary” for your gig work is a deductible business expense on Schedule C. For gig drivers and delivery workers, common examples include:

Keep receipts for all purchases. Even small expenses add up over the course of a year. A $30 hot bag, $15 phone mount, and $20 per month in cleaning supplies totals $785 annually. For tips on managing your receipts digitally, see our guide on receipt scanning 101.

10. Parking and Tolls

Parking fees and tolls incurred while performing gig work are 100% deductible, and they’re deductible in addition to the standard mileage rate. This is one of the few vehicle-related expenses you can claim on top of the per-mile deduction.

Deductible examples include metered parking, parking garage fees, airport pickup lot fees, bridge and highway tolls, and express lane charges—as long as they’re incurred during business driving. If you pay a monthly fee for parking in a downtown area where you primarily work gig shifts, the business-use portion is deductible.

11. Platform Fees and Commissions

Most gig platforms take a percentage of each fare or delivery fee. For example, Uber and Lyft typically take 20–25% of the rider’s fare as a service fee. DoorDash and Grubhub charge various service and delivery fees as well. These platform commissions are deductible business expenses on Schedule C.

Important nuance: How this works depends on what your 1099-NEC reports. Some platforms report your gross earnings (before their fees are deducted), while others report your net payout (after fees). If your 1099-NEC shows the gross amount, you must deduct platform fees as a business expense on Schedule C to avoid paying tax on money you never received. Check your platform’s annual tax summary carefully to understand which figure is reported.

Other deductible fees include subscription costs for premium platform features, instant cash-out fees, and any annual membership fees charged by the platform. Even small per-transfer fees for instant deposits add up over the year and are fully deductible.

12. Record-Keeping Best Practices

The IRS has strict requirements for substantiating business deductions, and the burden of proof is on you. If you’re ever audited and can’t produce records, the IRS can disallow your deductions entirely. Here’s what you need to track:

Mileage Records

The IRS requires a contemporaneous log—meaning recorded at or near the time of the trip, not reconstructed months later. For each business trip, your log must include:

• Date of the trip
• Destination (or route taken)
• Business purpose of the trip
• Miles driven (odometer start and end, or GPS tracking)

A GPS-based mileage tracking app like tiktraq satisfies all of these requirements automatically by recording your route, timestamps, and distance for every trip. This is far more reliable than a handwritten log and much harder for the IRS to dispute. For a deep dive on exactly what the IRS requires, see How to Create an IRS-Proof Mileage Log.

Expense Records

For all other deductions, keep receipts showing the date, amount, payee, and business purpose. Digital copies (photos or scans) are acceptable—the IRS does not require original paper receipts. Store them in a cloud-based system or an app with receipt scanning to ensure you never lose one.

How Long to Keep Records

The IRS generally has three years from the date you file your return to initiate an audit (six years if they suspect substantial underreporting of income). Keep all tax-related records for at least three years after filing. Many tax professionals recommend keeping them for seven years to be safe.

13. Common Audit Triggers for Gig Workers

While overall audit rates are relatively low, certain patterns on your tax return can increase the odds of IRS scrutiny. Being aware of these red flags helps you file accurately and defensibly:

• Reporting a Schedule C loss year after year. If your deductions exceed your income consistently, the IRS may classify your activity as a hobby rather than a business, disallowing your deductions entirely. Occasional losses are normal—especially in your first year—but three or more consecutive years of losses invite scrutiny.
• Claiming high mileage relative to income. If you report $15,000 in gig income but claim 40,000 miles, the IRS may question whether all those miles were truly business-related. Make sure your mileage is proportional to your earnings and you have a detailed, contemporaneous log to back it up.
• Round numbers everywhere. Reporting exactly $5,000 in supplies, $3,000 in phone expenses, and $2,000 in parking looks estimated rather than tracked. Real expenses have odd cents. Always use actual figures from your records.
• Claiming 100% business use of a vehicle. Unless you own a second personal vehicle and can prove it, claiming that a car is used exclusively for business is a red flag. Most people use their car for some personal driving; be honest about the split.
• Not reporting income from all platforms. The IRS receives copies of every 1099-NEC issued to you. If you earned $2,000 from Instacart and don’t report it, their automated systems will flag the discrepancy. Report all income, even from platforms that didn’t issue a 1099 because you earned less than $600.
• Missing or reconstructed mileage logs. If you’re audited and present a mileage log that was clearly created after the fact (e.g., one spreadsheet covering the entire year with no day-to-day variation), the IRS will likely disallow the deduction. Use a GPS-based tracker that records trips in real time to ensure your records hold up.

Putting It All Together

Let’s look at a realistic example. Say you earned $45,000 driving for Uber and DoorDash in 2026. Without any deductions, you’d owe roughly $6,400 in self-employment tax alone, plus federal and state income tax on the full $45,000.

Now apply your deductions: 22,000 business miles at 72.5¢/mile ($15,950), $1,200 in phone expenses (60% of your plan), $1,500 home office (simplified method), $400 in tolls and parking, $600 in supplies and gear, and $4,000 in health insurance premiums. That’s $23,650 in total deductions, reducing your taxable self-employment profit to $21,350. Your self-employment tax drops to roughly $3,025—a savings of over $3,300 on SE tax alone, plus significant income tax savings on top of that.

The key is tracking everything from day one. Every mile you don’t log and every receipt you lose is money left on the table. If you want to see how tiktraq stacks up against other tracking options, visit our comparison page.