Uber Driver Taxes in Arizona - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Uber Drivers in Arizona

Navigating the vibrant streets of Phoenix, Tucson, and beyond 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 earnings as self-employment income on Schedule C (Profit or Loss From Business) when filing their federal income tax return. Earnings over $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions, which are not automatically withheld from your Uber payouts.

How Arizona Handles Gig Worker Taxes

As a resident of Arizona, you are generally required to file a state income tax return if your income exceeds certain thresholds. Arizona operates under a flat income tax rate system, meaning all income is taxed at the same percentage, regardless of income level. For the 2025 tax year, the Arizona income tax rate is 2.5%. Self-employment income reported on your federal Schedule C must also be reported on your Arizona state income tax return. The primary form used for filing state income taxes as a self-employed individual in Arizona is Form 140, Arizona Individual Income Tax Return. You will likely need to complete Schedule A (Arizona Adjustments to Federal Income) and Schedule SE (Self-Employment Income) to accurately calculate your Arizona tax liability. Arizona also allows for certain deductions and credits that may reduce your overall tax burden. It's important to note that Arizona considers Uber driving a business activity, and therefore, you are responsible for tracking your income and expenses diligently. The Arizona Department of Revenue provides resources and guidance for self-employed individuals, including information on estimated tax payments, which may be required if you anticipate owing more than $1,000 in state taxes. Failure to file and pay on time can result in penalties and interest.

For more information and resources, please visit the Arizona Department of Revenue: https://azdor.gov/

Top Tax Deductions for Arizona Drivers

• Standard Mileage: The most popular deduction for Uber drivers. The 2025 rate is 70 cents per mile for business use. Given Arizona's expansive geography and the distances often driven between pickups, this rate can significantly reduce taxable income.
• Tolls & Parking: While Arizona doesn't have extensive toll road networks, any tolls incurred during rides, as well as parking fees directly related to picking up or dropping off passengers, are deductible.
• Phone & Data Plan: You can deduct the percentage of your phone bill 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. Maintain receipts for these purchases.

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

Understanding the 15.3% Self-Employment Tax

This tax covers both Social Security and Medicare taxes. Unlike traditional employment where these taxes are withheld from your paycheck, as an Uber driver, you are responsible for paying both the employer and employee portions, totaling 15.3% on net earnings exceeding $400. You can deduct one-half of your self-employment tax from your gross income when calculating your adjusted gross income (AGI).