Uber Driver Taxes in Alabama - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Uber Drivers in Alabama

Navigating the scenic routes of Alabama as an Uber driver offers flexibility, but also brings unique tax responsibilities. As an independent contractor, understanding these obligations is crucial for a smooth tax season.

The IRS requires Uber drivers to report their income on Schedule C (Profit or Loss From Business) with Form 1040. Crucially, income exceeding $400 necessitates the payment of self-employment taxes, covering both Social Security and Medicare contributions, which are not automatically withheld from your earnings by Uber.

How Alabama Handles Gig Worker Taxes

As a resident of Alabama, you are required to file a state income tax return, even if no Alabama income tax is ultimately due. Alabama utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, self-employed individuals will primarily use Form A-4 to calculate and remit their state income tax liability. Alabama’s Department of Revenue offers resources and guidance specifically for self-employed individuals, including information on estimated tax payments, which are generally required if you expect to owe $1,000 or more in Alabama income tax. It’s important to note that Alabama does not have a separate self-employment tax like the federal government; your federal self-employment tax calculation impacts your overall tax picture. Alabama also allows for certain deductions that can reduce your taxable income, mirroring some federal deductions. Keep meticulous records of all income and expenses to ensure accurate reporting. The state also offers credits for certain expenses, so exploring these options can potentially lower your tax burden. Failing to file or pay taxes on time can result in penalties and interest, so proactive tax planning is highly recommended. For detailed information and forms, please visit the Alabama Department of Revenue: https://revenue.alabama.gov/

Top Tax Deductions for Alabama Drivers

• Standard Mileage: The most popular deduction for Uber drivers. For the 2025 tax year, the standard mileage rate is 70 cents per mile. Given Alabama’s relatively moderate gas prices, the standard mileage rate is likely to be a beneficial option for most drivers.
• Tolls & Parking: While Alabama doesn’t have extensive toll road networks, any tolls incurred during rides, as well as parking fees directly related to Uber trips, are deductible.
• Phone & Data Plan: You can deduct the percentage of your phone and data plan that is used for business purposes. Keep a log of business-related calls and data usage to support your deduction.
• Vehicle-Related Costs: Expenses like car washes, phone mounts, dash cams, first-aid kits, and insulated food bags used for deliveries are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil changes, repairs, and insurance) in the same tax year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

This tax comprises two components: 12.4% for Social Security and 2.9% for Medicare. Because Uber and similar platforms do not withhold these taxes from your earnings, it’s your responsibility to calculate and pay them through estimated tax payments throughout the year, or when you file your annual tax return. Remember, only net earnings (income after deductions) are subject to this tax.