Updated for 2026 (Filing 2025 Taxes)
Navigating the Valley of the Sun as a DoorDash Dasher offers incredible flexibility, but it also turns you into a small business owner in the eyes of the IRS. Whether you're delivering prickly pear margaritas in Old Town Scottsdale or hitting the lunch rush in Downtown Phoenix, you're responsible for managing your own tax withholdings. You aren't just a driver: you're an independent contractor.
Because you're self-employed, DoorDash won't take taxes out of your weekly deposits. Instead, you'll receive a Form 1099-NEC if you earn over $600. You'll report this income on Schedule C of your federal return. To keep your hard-earned money, you need to be aggressive about tracking expenses to lower your "net profit," which is the only amount the government actually taxes. This is where our Advanced Calculator becomes your best friend: it allows you to compare the Standard Mileage rate against Actual Expenses (including Depreciation) and even calculate potential Home Office savings.
One of the most overlooked benefits for Phoenix Dashers is the Qualified Business Income (QBI) deduction, also known as Section 199A. This provision allows most gig workers to deduct up to 20% of their net business income right off the top of their federal income tax bill. If your delivery business makes a profit, you likely qualify. This isn't an "expense" you have to pay for: it's a tax break designed specifically to help small business owners like you keep more cash in your pocket.
Arizona has simplified its tax code recently, which is great news for Dashers. The state utilizes a flat income tax rate, currently set at 2.5% for the 2025 tax year. Even if your federal tax liability is zero after your deductions, you'll still need to file Arizona Form 540 to report your earnings. Keep in mind that while the flat rate is low, the Arizona Department of Revenue still expects quarterly estimated payments if you expect to owe more than $500 for the year.
Living and working in the desert creates unique deductible opportunities. The intense Phoenix heat isn't just a nuisance: it's a business cost. Extra maintenance required to keep your cooling system running or the frequent car washes needed to remove desert dust are legitimate factors to consider when deciding between deduction methods. If you're picking up orders near Mill Avenue or Chase Field, those inevitable parking fees are fully deductible. Just make sure you save your digital receipts or take photos of them.
This is the most critical decision you'll make at tax time. You have two ways to write off your vehicle costs, and choosing the wrong one could cost you thousands. Our Advanced Calculator can help you run the numbers for both scenarios:
Pro Tip: You can't switch back and forth easily. If you want to use the standard mileage rate, you must choose to use it in the first year the car is available for business use. In later years, you can then choose either method.
The biggest "sticker shock" for new Dashers is the Self-Employment (SE) tax. This 15.3% tax covers your contributions to Social Security and Medicare. In a traditional job, your boss pays half (7.65%) and you pay half. When you're the boss, you pay both sides. However, there's a silver lining: you can deduct the "employer" half of this tax (7.65%) on your federal income tax return, which helps soften the blow. This tax is calculated on your net profit after all your other deductions are taken out, which is why tracking your mileage and Phoenix-specific expenses is so vital.
Estimate your taxes using current IRS rules.
📖 Confused by these terms? Read the Manual →
*Disclaimer: This is a simplified estimate. Includes SE Tax, State Tax, and QBI Deduction impact. Consult a CPA.
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