Gig driving: the mileage deduction is 72.5 cents a mile in 2026, and it is most of the profit
A driver who logs 15,000 business miles deducts $10,875 before any other expense. Whether the app's earnings figure is income at all depends on that one number.
On January 1, 2026 the IRS's standard mileage rate for business use of a car rose to 72.5 cents a mile, from 70 cents in 2025. For anyone who drives for a delivery or ride app, that rate is the largest number on their tax return, and it is the one most often under-recorded.
Why it dominates
Take a driver whose app reports $30,000 of earnings in 2026 and who drove 15,000 miles doing it. At 72.5 cents, the mileage deduction is $10,875. Add a phone plan, a share of insurance and the odd car wash — say $1,500 — and net profit is $17,625. That is the figure self-employment and income tax are charged on, not the $30,000.
At the combined rate of about 30% worked through in the side-income guide, each business mile recorded reduces tax by roughly 22 cents; each mile forgotten costs the same. Over 15,000 miles, forgetting a third of them costs about $1,100. Illustrative rates.
Which miles count
- Miles driven with a passenger or a delivery on board — the app records these.
- Miles driven between jobs while logged in and available. The app often does not record these, and they are frequently a third of the total.
- Miles to the first pickup from wherever the shift started, and back from the last drop — with a caution: driving from home to a regular first location can be treated as commuting, which is not deductible.
The record the IRS expects is contemporaneous: date, miles, purpose. A mileage app or a notebook both work. The app's annual summary is a starting point, not the record, because of the between-jobs gap.
The alternative: actual expenses
Instead of the standard rate, a driver can deduct the business share of actual costs — fuel, insurance, repairs, depreciation, lease payments — using the business percentage of total miles. It is more record-keeping and it can come out higher for an expensive car with high running costs. One rule constrains the choice: a car that starts on actual expenses using accelerated depreciation cannot switch to the standard rate later.
| Method | Records needed | Deduction |
|---|---|---|
| Standard mileage | Miles, dates, purpose | 15,000 × $0.725 = $10,875 |
| Actual expenses | Every receipt plus a mileage log for the 75% business share | 75% of all car costs, including depreciation |
What is not deductible under the standard rate
The standard rate is meant to cover fuel, maintenance, insurance and depreciation, so none of those are deducted again on top of it. Parking and tolls incurred on business are deductible in addition, under either method.
Sources
- IRS sets 2026 business standard mileage rate at 72.5 cents per mile, up 2.5 centsInternal Revenue Service · checked Sep 24, 2026
- Standard mileage ratesInternal Revenue Service · checked Sep 24, 2026