Updated for 2026 (Filing 2025 Taxes)
Navigating the bustling streets of the Mile High City as an Amazon Flex driver offers a great deal of freedom, but it also places the burden of tax compliance squarely on your shoulders. Whether you're hauling packages from the busy fulfillment centers in Aurora or navigating the tight residential turns in Wash Park, the IRS views you as a small business owner. This means you aren't just a driver: you're an independent contractor responsible for every cent of your tax liability.
As a self-employed individual, you won't see taxes taken out of your Amazon payouts. Instead, you'll report your earnings on Schedule C of your Form 1040. You're responsible for paying self-employment taxes (Social Security and Medicare) on any net profit over $400. It's a different world than being a W-2 employee, and keeping meticulous records is the only way to ensure you don't overpay the government.
One of the most overlooked benefits for Denver drivers is the Qualified Business Income (QBI) deduction. Under current tax law, most Amazon Flex drivers can deduct up to 20% of their total business income right off the top before income taxes are even calculated. This isn't a business expense like gas or car repairs; it's a specific tax break designed for small businesses and gig workers. It's a significant way to lower your taxable income, so you'll want to make sure your tax software or accountant applies this to your filing.
Colorado makes things relatively straightforward with a flat income tax rate, which is currently 4.40%. This applies to all residents, whether you're a full-time driver or just picking up blocks on the weekend. You'll report your earnings using Form DR 0104. While the state tax is flat, don't forget that Denver has its own specific business environment. While the city's Occupational Privilege Tax (often called the "head tax") is typically an employer-level tax, it's a reminder that local regulations can be complex.
Driving in Denver presents unique challenges that can actually help your tax situation. For instance, the heavy traffic on I-25 or the stop-and-go nature of downtown deliveries often means higher wear and tear on your vehicle. Colorado also offers various credits that might apply to you, such as the state's Earned Income Tax Credit, which can help offset what you owe. You can find more specific forms and guidance on the Colorado Department of Revenue website at: https://www.colorado.gov/revenue.
Deciding which tax strategy to use can be the difference between a refund and a massive bill. Our Advanced Calculator is designed specifically for Denver gig workers to help you make the right choice. You can now perform a side-by-side comparison of the "Standard Mileage" method versus "Actual Expenses."
Expert Tip: You can't switch back and forth mid-year. If you choose the standard mileage rate in the first year you use a car for business, you can switch to actual expenses in later years. However, if you start with actual expenses, you're generally stuck with that method for the life of that vehicle.
This is the one that catches most new drivers off guard. When you're an employee, your boss pays half of your Social Security and Medicare taxes. When you're the boss, you pay both halves. This totals 15.3%. Since Denver's cost of living is high, it's vital to set aside about 25% to 30% of your net income for both federal and state taxes. This ensures you aren't scrambling when quarterly estimated tax payments are due. By using our Advanced Calculator and tracking every mile, you can significantly reduce the "net" number that this 15.3% is calculated against.
Estimate your taxes using current IRS rules.
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*Disclaimer: This is a simplified estimate. Includes SE Tax, State Tax, and QBI Deduction impact. Consult a CPA.
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