How is rideshare and delivery income taxed?

Rideshare and delivery drivers are self-employed for tax purposes, not employees. Net profit goes on Schedule C, and self-employment tax applies to it on top of income tax. Platforms may report the same year's earnings on Form 1099-K, Form 1099-NEC, or both, and no tax is withheld, so quarterly estimated payments are usually required.

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A rule behind this answer changed recently. Confirm the current treatment with an advisor before acting.

For tax year 2025

15.3% (12.4% Social Security up to the wage base, plus 2.9% Medicare) (self-employment tax rate, 2025)

Key points

A rideshare or delivery driver is self-employed and reports net profit on Schedule C, because the activity is pursued for profit with continuity and regularity.
Rideshare and delivery profit carries self-employment tax as well as income tax, and no tax is withheld from a platform payout, so quarterly estimated payments are generally required.
A single platform can issue both a Form 1099-K, which reports fares settled as third-party network transactions, and a Form 1099-NEC for bonuses, referrals, and incentives.
The gross reported on a Form 1099-K can include platform commission and fees the driver never received, so it must be reconciled to the platform's annual summary and the fees deducted as expenses.
Vehicle cost may be computed with the standard mileage rate or with actual expenses, and both methods require mileage records kept at or near the time of the driving, showing the date, the miles, and the business purpose; a log maintained on a weekly basis counts as timely kept.

Why is a rideshare or delivery driver self-employed?

An activity counts as a business when the primary purpose is income or profit and the person is involved in it with continuity and regularity. Driving regular shifts through a platform meets both parts, so the earnings are business income reported on Schedule C rather than wages. The driver deducts ordinary and necessary business expenses against those earnings and is taxed on what remains.

That status brings self-employment tax with it. A wage earner splits Social Security and Medicare tax with an employer; a self-employed driver pays both halves on net earnings. Because platforms withhold nothing, income tax and self-employment tax are both paid during the year through quarterly estimated payments. Anyone in business for themselves generally has to make those payments, and skipping them can produce an underpayment penalty even when the full balance is settled at filing.

Why might a driver get both a 1099-K and a 1099-NEC?

The two forms report different things. A payment settlement entity must file Form 1099-K for payments made in settlement of payment card and third-party network transactions, which is what a fare or delivery paid through the app is. Bonuses, referral payments, quest and incentive payments are not settled transactions of that kind; they are non-employee compensation and are reported on Form 1099-NEC. One platform can therefore send a driver both forms for the same year.

Two practical points follow. First, the reporting threshold for Form 1099-K has changed more than once in recent years, so whether a form arrives at all depends on the year and the amount, and the income is reportable whether or not a form arrives. Second, the gross on a 1099-K can include the platform's commission, service fees, and other amounts deducted before payout. That gross is reported as income and the fees are then deducted as business expenses, so the return should reconcile to the platform's annual summary rather than to the bank deposits.

Should a driver claim standard mileage or actual expenses?

There are two ways to deduct vehicle cost. The standard mileage rate multiplies business miles by a published per-mile amount that is intended to stand in for fuel, maintenance, insurance, and depreciation. The actual expense method totals what the car really cost to run over the year and applies the business-use percentage of it, with depreciation or lease payments included.

Neither is better in the abstract. A high-mileage driver in an efficient, inexpensive car often does better on standard mileage; a driver with a costly vehicle, heavy repairs, or high insurance may do better on actual expenses. The choice matters beyond one year, because the method elected in the first year the vehicle is used for business limits which method is available afterwards and how depreciation is handled. Parking and tolls incurred on a job are deductible under either method, and interest on a car loan is handled separately from the mileage computation.

What mileage records hold up on review?

Publication 463 sets the substantiation standard for car and truck expenses, and the records that survive a review are contemporaneous. A log or tracking app that captures the date, the starting and ending odometer or the miles driven, and the business purpose, recorded at or near the time of the driving, is what supports the deduction. Publication 463 accepts a log maintained on a weekly basis as timely kept, so the records do not have to be written up the same day. A total reconstructed from memory months later is the weakest position a driver can take, and it is the one that fails most often when questioned.

Category matters as much as quantity. Miles driven with a passenger or an order, miles driven to a pickup, and miles repositioning between jobs are generally business miles; the trip from home to the first pickup of the day and back at the end is treated differently. Keeping the log by category as the shift runs is far easier than untangling it later, and it also gives the driver a real cost-per-mile figure, which is the number that shows whether a given shift or platform is worth driving at all.