Uber Driver Taxes in Austin, Texas - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Uber Drivers in Austin, Texas

Navigating the vibrant streets of Austin as an Uber driver offers flexibility, but it also comes with tax responsibilities. Successfully managing these obligations is crucial for avoiding penalties and maximizing returns.

As an independent contractor, income earned through Uber (and other gig platforms) is reported to the IRS on Schedule C (Profit or Loss from Business). This means drivers are responsible for not only income tax but also self-employment tax, which covers both Social Security and Medicare contributions. Platforms like Uber do not withhold these taxes, making proactive tax planning essential.

How Texas Handles Gig Worker Taxes

The big perk in the Lone Star State is no personal income tax. However, be aware of the Texas Franchise Tax. While it has a high threshold (over $1.2 million in revenue) that rarely applies to solo gig workers operating as sole proprietorships or single-member LLCs, it's a key part of the state's business tax structure. Even though you likely won't owe Franchise Tax, understanding its existence is important as your Uber driving income grows. Texas does not have a state-level equivalent to the federal self-employment tax, but federal obligations still apply. Austin drivers should also be mindful of potential city-specific regulations regarding business licenses or permits, though these are generally not required for basic Uber operation. Parking costs, especially around popular entertainment districts like 6th Street or during events like South by Southwest (SXSW), can add up, and these are potentially deductible as business expenses. The Texas Comptroller of Public Accounts provides comprehensive information on state taxes and business regulations: Texas Comptroller.

Top Tax Deductions for Austin, Texas Drivers

• Standard Mileage: The #1 deduction. The 2025 rate is 70 cents/mile. With relatively lower gas prices in Texas compared to states like California, the standard mileage rate is often the most advantageous method for maximizing deductions.
• Tolls & Parking: Austin drivers frequently encounter tolls on highways like SH-71 and Loop 1. Keep detailed records of all toll expenses paid using TxTag or other methods. Parking fees incurred while actively waiting for or completing rides are also deductible.
• Phone & Data Plan: The percentage of your phone and data plan attributable to business use is deductible. If you use your phone 70% of the time for Uber-related activities (navigation, ride requests, communication), you can deduct 70% of the bill.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts for safe navigation, and insulated bags for food delivery (if you also drive for Uber Eats) are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas or repairs in the same year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

The 15.3% self-employment tax comprises two components: 12.4% for Social Security and 2.9% for Medicare. Because Uber and similar platforms classify drivers as independent contractors, they do not withhold these taxes from your earnings. Therefore, it’s crucial to estimate your tax liability throughout the year and make quarterly estimated tax payments to the IRS to avoid underpayment penalties.