Uber Driver Taxes in Texas - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Uber Drivers in Texas

Navigating the bustling streets of cities like Austin, Dallas, and Houston as an Uber driver offers flexibility, but also brings tax responsibilities. As an independent contractor, earnings from Uber and other gig platforms are considered self-employment income, requiring careful tax planning.

The IRS requires Uber drivers to report their income on Schedule C (Profit or Loss from Business) with Form 1040. Crucially, this income is also subject to self-employment tax, covering both Social Security and Medicare taxes, which are not automatically withheld from your earnings. Proper record-keeping throughout the year is essential to accurately calculate income, deductions, and tax liability.

How Texas Handles Gig Worker Taxes

The big perk in the Lone Star State is no personal income tax. This means Texas residents don’t have to worry about state income tax on their Uber earnings. 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, it's a key part of the state's business tax structure. Even though you likely won’t meet this threshold, understanding its existence is important. Texas does not have a specific tax classification for "gig workers," so standard business tax principles apply. Drivers operating as sole proprietorships (the most common arrangement) generally don't need to file a separate state business tax return unless their revenue exceeds the franchise tax threshold. It’s also important to note that while there’s no state income tax, local jurisdictions can impose taxes, though these are less common for independent contractors. Staying informed about any potential city or county-level regulations is always a good practice. For comprehensive information on Texas taxes, consult the Texas Comptroller of Public Accounts website.

Top Tax Deductions for Texas Drivers

• Standard Mileage: The #1 deduction. The 2025 rate is 70 cents/mile. With generally lower gas prices in Texas compared to other states, utilizing the standard mileage rate is often a very advantageous strategy for maximizing deductions.
• Tolls & Parking: Texas has extensive toll road systems, including TxTag lanes around major metropolitan areas. Keep detailed records of all toll expenses and parking fees incurred while actively driving for Uber.
• 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, communication with riders, etc.), you can deduct 70% of the bill.
• Vehicle-Related Costs: Expenses like car washes, phone mounts, dash cams, and insulated food bags (if delivering food) are deductible as business expenses.

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

Self-employment tax is a combined Social Security and Medicare tax for individuals who work for themselves. Because Uber doesn’t withhold these taxes from your payments, you are responsible for calculating and paying them directly to the IRS. The current rate is 15.3% on net earnings over $400. You can reduce your self-employment tax liability by deducting one-half of your self-employment tax from your gross income.