Uber Driver Taxes in Tennessee - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Uber Drivers in Tennessee

Navigating the vibrant streets of Nashville, Memphis, or Knoxville as an Uber driver offers flexibility, but also brings tax responsibilities. As an independent contractor, earnings from Uber and other gig platforms are subject to federal and, while limited, state tax considerations.

The IRS requires Uber drivers to report their income on Schedule C (Profit or Loss from Business) as self-employment income. This means drivers are responsible for paying both income tax and self-employment tax, which covers Social Security and Medicare. Platforms such as Uber do not withhold these taxes, making proactive tax planning crucial.

How Tennessee Handles Gig Worker Taxes

Tennessee offers a uniquely favorable tax climate for independent contractors. The state boasts no state income tax on wages or salaries, meaning Uber drivers won’t face a state income tax bill based on their earnings. However, this does not exempt drivers from federal income tax or self-employment tax obligations. Tennessee does levy sales tax on certain services, but ride-sharing is generally considered a transportation service and is subject to existing transportation taxes, which are collected by the platform, not directly by the driver. A significant portion of Tennessee’s revenue comes from the Hall Income Tax, which taxes interest and dividend income, but this does not apply to earnings from self-employment. Given Tennessee’s lack of state income tax, meticulous record-keeping for federal deductions becomes even more important to minimize overall tax liability. Drivers should be aware that while Tennessee doesn’t have a traditional income tax, it does have other taxes, such as property taxes, that may be relevant depending on individual circumstances. For further information on Tennessee tax laws, please visit the Tennessee Department of Revenue: https://www.tn.gov/revenue.html.

Top Tax Deductions for Tennessee Drivers

• Standard Mileage: The most popular and often most beneficial deduction. For the 2025 tax year, the standard mileage rate is 70 cents per mile. Given Tennessee’s relatively moderate gas prices compared to states like California, the standard mileage rate is likely to be a strong choice for most drivers.
• Tolls & Parking: While Tennessee doesn’t have extensive toll road networks, any tolls incurred while actively driving for Uber are deductible. Parking fees directly related to pickups and drop-offs are also deductible.
• Phone & Data Plan: If a portion of your phone and data plan is used for Uber driving (tracking the app, communicating with passengers), you can deduct the business percentage of the bill.
• Vehicle-Related Costs: Expenses like car washes, phone mounts, dash cams, first-aid kits, and insulated food bags used specifically for Uber driving are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (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

Self-employment tax is comprised of Social Security and Medicare taxes. When working as an employee, these taxes are automatically withheld from your paycheck. As an independent contractor, you are responsible for paying both the employer and employee portions, totaling 15.3% on net earnings over $400. This is a significant tax obligation, so accurate income tracking and deduction claiming are essential.