As the gig economy continues to grow, more individuals are turning to self-employment through driving, delivery, freelance services, and independent contracting. With this rise, understanding how to file taxes efficiently has never been more important. One significant benefit available to gig workers is the IRS standard mileage rate deduction, which has seen increases for the 2025 and projected 2026 tax years. This detailed guide explores how these new rates affect your Form 1040 filing and how to maximize your deductions as a gig worker.
Who Is a Gig Worker?
Gig workers are independent contractors or self-employed individuals who earn income through temporary or flexible jobs. This includes rideshare drivers (like Uber and Lyft), food delivery drivers (DoorDash, Grubhub), freelance professionals, online marketplace sellers, and more.
Unlike employees, gig workers receive Form 1099-NEC or 1099-K instead of a W-2 and must file taxes as self-employed individuals using Schedule C with Form 1040. With this classification, they are responsible for their own tax payments and can deduct various business expenses, including vehicle-related costs.
Understanding the Standard Mileage Rate
The IRS standard mileage rate is a per-mile deduction that self-employed individuals can claim for business use of a personal vehicle. Instead of calculating actual car expenses like fuel, maintenance, insurance, and depreciation, the standard mileage rate provides a simplified method to deduct vehicle-related costs.
This deduction is particularly beneficial for gig workers who use their personal vehicle extensively for business activities like delivering goods, driving passengers, or visiting clients.
Standard Mileage Rate for 2025 and 2026
Each year, the IRS adjusts the standard mileage rate based on fuel costs, insurance trends, and overall vehicle operating expenses. Here are the rates for the relevant years:
- 2025 Mileage Rate: 67 cents per mile (up from 65.5 cents in 2024)
- Projected 2026 Mileage Rate: Expected to be 68.5–69.0 cents per mile (subject to official IRS announcement in December 2025)
These increases can significantly boost the deductions available to gig workers who log many miles during the year. For example, driving 20,000 business miles in 2025 would result in a $13,400 deduction (20,000 x $0.67).
How to Claim the Deduction on Form 1040
Gig workers report their income and expenses on Schedule C (Profit or Loss from Business), which is attached to Form 1040. To claim the standard mileage deduction:
- Keep a detailed mileage log or use a GPS-based app that records each business-related trip.
- On Schedule C, Line 9, report your car and truck expenses using the standard mileage method.
- Include additional vehicle information on Part IV of Schedule C, such as total miles driven and the date the vehicle was placed in service.
Accurate records are crucial in the event of an IRS audit. Logs should include the date, starting and ending odometer readings, the purpose of the trip, and the total miles.
Eligibility for the Standard Mileage Rate
To use the standard mileage method, gig workers must meet the following IRS requirements:
- You must own or lease the vehicle.
- You must use the vehicle for business purposes.
- You must choose the standard mileage method in the first year the vehicle is placed in service.
- If you switch to actual expenses in a later year, you cannot switch back to the standard mileage method for that vehicle.
Note: You cannot use the standard mileage rate if you claimed Section 179 depreciation or used MACRS accelerated depreciation on the vehicle.
Business vs. Personal Use: How to Allocate Miles
Only miles driven for business purposes are deductible. Personal trips, commuting to your home office (if not qualifying under home office rules), and non-business errands are not deductible.
Here’s how to allocate usage:
- Total miles driven in the year: Include both business and personal miles.
- Total business miles: Only include miles directly related to gigs or business tasks.
- Percentage of business use: Divide business miles by total miles to determine the deductible portion if using actual expenses.
Other Vehicle-Related Deductions to Consider
In addition to the standard mileage rate, gig workers may deduct other vehicle-related costs in limited circumstances or when using the actual expense method. These may include:
- Tolls and parking fees incurred during business trips.
- Interest on a car loan (only if self-employed and not applicable for employees).
- Lease payments (if using actual expenses and not standard mileage).
Note that if you claim the standard mileage rate, you cannot also deduct costs like gas, maintenance, insurance, or depreciation.
Benefits of Using the Standard Mileage Rate
The standard mileage method provides several advantages for gig workers:
- Simplicity: No need to track individual vehicle expenses.
- Fewer record-keeping burdens: Only need to track mileage rather than receipts.
- Favorable deduction: Especially beneficial when driving older or paid-off vehicles.
It’s a popular choice among rideshare and delivery drivers who put high mileage on their personal vehicles throughout the year.
Common Mistakes to Avoid
When claiming the standard mileage deduction on Form 1040, be sure to avoid these frequent pitfalls:
- Failing to keep mileage logs: IRS requires contemporaneous records.
- Claiming commuting miles: Daily trips between home and a fixed work location are not deductible.
- Mixing methods: You cannot switch back and forth between standard mileage and actual expenses for the same vehicle.
- Double dipping: Don’t deduct fuel or repairs if you’re using the standard mileage rate.
Software Tools and Apps for Mileage Tracking
Several mobile apps are available to help gig workers accurately track their business mileage. These apps automate the process and generate IRS-compliant reports:
- MileIQ
- Everlance
- Stride
- Hurdlr
Using a mileage tracking app reduces the risk of underreporting or forgetting to log trips, which can ultimately result in higher deductions and lower tax bills.
Tax Planning for 2025 and 2026
Gig workers should begin planning now to take full advantage of the higher standard mileage rates. Here are some tax tips:
- Start tracking early: Begin recording miles on January 1 each year.
- Use separate bank accounts: Keep business and personal expenses separated.
- Make estimated tax payments: Since taxes are not withheld, quarterly payments prevent penalties.
- Consult a tax professional: Get help navigating complex deductions and filing requirements.
Filing Form 1040: Step-by-Step for Gig Workers
Here’s a quick breakdown of how a gig worker completes their tax return using the mileage deduction:
- Gather all 1099-NEC or 1099-K forms reporting gig income.
- Download or obtain Form 1040 and Schedule C.
- Fill out Schedule C, entering your total gross receipts and claiming the mileage deduction on Line 9.
- Include any additional business expenses or other deductions on Schedule C.
- Report net profit or loss from Schedule C on Form 1040, Line 8.
- Complete Schedule SE to calculate self-employment tax and report it on Form 1040.
Accurate reporting ensures you receive all eligible deductions while remaining compliant with IRS rules.
Conclusion: Drive Your Tax Bill Down with the Mileage Deduction
For gig workers, the IRS standard mileage rate offers a powerful and user-friendly way to lower your taxable income on Form 1040. The increased mileage rates for 2025 and the expected boost for 2026 mean even more savings for those who use their personal vehicles for work.
By maintaining accurate mileage logs, understanding IRS rules, and filing with care, gig workers can optimize their returns, reduce tax liability, and retain more of their hard-earned income. Take action early, plan ahead, and let every business mile help steer you toward greater tax efficiency.
