Uber Driver Taxes in Seattle, Washington - 2026

Updated for 2026 (Filing 2025 Taxes)

The Ultimate Seattle Uber Driver’s Tax Strategy Guide

Navigating the rainy streets of the Emerald City as an Uber driver offers incredible flexibility, but it also places the full weight of tax compliance on your shoulders. Since you're not a W-2 employee, you're essentially running your own small business. Managing your obligations correctly isn't just about staying out of trouble with the IRS: it's about keeping more of your hard-earned Seattle fares in your pocket.

As an independent contractor, you'll report your earnings on Schedule C (Profit or Loss from Business). Because you're self-employed, you're responsible for both income tax and the 15.3% self-employment tax on net earnings over $400. However, there’s a major silver lining: the Qualified Business Income (QBI) deduction. This often-overlooked provision allows eligible drivers to deduct up to 20% of their net business income from their federal income taxes. When you combine this with Washington’s lack of a state income tax, Seattle drivers have a unique opportunity to maximize their take-home pay.

The Washington Advantage: B&O Taxes and Local Rules

Washington is one of the few states without a personal income tax, which is a massive win for your bottom line. However, the state makes up for it with the Business & Occupation (B&O) tax. This is a tax on gross receipts, meaning it’s calculated on what you earn before expenses. The good news? Most part-time or even full-time Uber drivers in Seattle won't hit the high annual gross income thresholds required to actually pay the tax, but you may still be required to file a return if you're registered with the Department of Revenue. For the "Service and Other Activities" classification, the small business tax credit often wipes out the liability for many gig workers.

Seattle-specific regulations are also a factor. If you drive within city limits, you generally need a Seattle business license. While the city has specific "TNC" (Transportation Network Company) regulations, you should monitor your annual revenue to see if you trigger local city tax filings. Don't forget that tolls on the SR-520 bridge or the SR-99 tunnel are deductible business expenses if you're carrying a passenger or heading to a specific pickup. Our Advanced Calculator can help you track these specific costs alongside your earnings to ensure your quarterly estimates are spot on.

Maximizing Your Deductions: Standard vs. Actual Expenses

To truly lower your tax bill, you need to choose the right method for vehicle deductions. Most drivers default to the standard mileage rate, but in a high-cost area like Seattle, that might not be the smartest move. Use our Advanced Calculator to compare these two paths:

• Standard Mileage Rate: For 2025, the rate is 70 cents per mile. This covers everything: gas, insurance, repairs, and depreciation. It’s simple to track, but it doesn't always reflect the high cost of maintaining a vehicle in the Pacific Northwest.
• Actual Expenses: This method allows you to deduct the specific costs of operating your vehicle. This includes gas, new tires for winter weather, oil changes, insurance, and even a portion of your lease payments. Most importantly, it includes Depreciation, which can be a massive deduction if you purchased a new vehicle for rideshare work.
• Home Office Deduction: If you have a dedicated space at home where you manage your business, track your earnings, or clean your vehicle supplies, you may qualify for the Home Office deduction. Our calculator can help you determine the square footage percentage to claim a portion of your rent, utilities, and internet.
• Parking and Tolls: While you can't deduct parking tickets or speeding fines, you can deduct the cost of paid parking downtown or tolls incurred while working.

Expert Tip: You can't switch from Actual Expenses back to Standard Mileage easily. If you want the option to use the Standard Mileage rate in later years, you must choose it in the first year the car is available for business use.

Understanding the 15.3% Self-Employment Tax

When you work a 9-to-5, your employer pays half of your Social Security and Medicare taxes. As an Uber driver, you're both the employer and the employee, so you pay the full 15.3%. This is why tracking every possible deduction is vital: every dollar you deduct reduces the "net income" that this 15.3% tax is applied to.

Because Uber doesn't withhold taxes for you, the IRS expects you to pay as you go via quarterly estimated tax payments. If you wait until April to pay everything at once, you’ll likely face underpayment penalties. Use our Advanced Calculator to stay ahead of these deadlines. It factors in your Seattle-specific expenses and the QBI deduction to give you a realistic look at what you actually owe, helping you avoid surprises when tax season rolls around.

For more specific details on Washington's unique business tax structure, you can visit the Washington State Department of Revenue at https://dor.wa.gov/.