Tax Deductions for Delivery Drivers

If you drive for DoorDash, Uber Eats, Instacart or another delivery platform, you can deduct business-related expenses that the IRS considers ordinary and necessary. These include costs you directly incur while picking up and delivering orders along with some general business expenses. While many potential deductions exist, here are the most common ones you might claim with the IRS on your Schedule C (Form 1040).

Deductible business expenses for delivery drivers

As a delivery driver, you might qualify to deduct these types of business expenses:

• Vehicle expenses (standard mileage or actual expenses)
• Parking fees
• Tolls
• Delivery equipment and supplies
• Phone-related costs
• Platform commissions and fees
• Home office expenses
• Qualifying health insurance premiums
• Pre-tax retirement savings contributions
• Relevant continuing education expenses

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Vehicle expenses

The IRS allows deductions for vehicle use as you’re driving between pickup locations, such as stores and restaurants, and customer delivery locations. Driving to purchase necessary business equipment and supplies can also qualify. However, commuting costs (driving to and from home) usually won’t qualify – unless you must travel outside of your metro area.

The IRS lets you choose between the standard mileage rate and actual expenses methods for deducting vehicle expenses and details them in Publication 463. For either method, you must carefully track your business mileage, which you can do easily with an app like Driversnote. 

Standard mileage rate

Rather than listing and calculating several vehicle expenses, you can write off your business mileage at the standard mileage rate of $0.67 per mile (as of 2024). For example, if you drive 1,000 miles for business purposes this year, your deduction would be $670. 

The IRS lists requirements for using this method. If you lease your vehicle, you must pick this method from the start since switching isn’t allowed. You can usually use this method at any time if you own the car, though exceptions apply for certain depreciation deductions and allowances. 

Note that you can’t use the standard mileage rate method for rented cars. Instead, you can use the actual expenses method.

Actual expenses method

The actual expenses method lets you write off the business-related portion of many types of individual vehicle expenses, including:

• Car loan interest (for owners)
• Vehicle depreciation (for owners)
• Car lease payments (for lessees)
• Gas, diesel or electricity
• Maintenance, such as oil changes
• Vehicle repairs
• Car registration and license fees
• Mandatory vehicle inspections
• Roadside assistance plans
• Car insurance premiums
• Car rental fees

Keep receipts and detailed logs to accurately determine and report your actual expenses. You can total your eligible vehicle expenses, which you’ll multiply by the percentage of business-related miles to find your deduction amount. 

Example: Say you spend $3,000 on fuel, $1,200 on car loan interest, $1,000 on repairs and maintenance, $800 on insurance and $150 in license and registration fees. While this totals $6,150, you can only deduct $3,075 if your business-related mileage is only 50%. 

You can read more in our self-employed mileage deduction rules guide.

Parking and toll fees

You can write off eligible parking and toll expenses separately regardless of whether you use the standard mileage rate or actual expenses method for other vehicle expenses.

If a pickup or delivery location requires paid parking, you can write off the expense. However, you can’t deduct parking costs incurred while making non-business stops during your delivery runs or simply parking at your residence. 

While traveling between pickup and delivery locations, you can also deduct tolls on your taxes. Examples include highway, EZ pass, tunnel and bridge tolls. The IRS doesn’t allow writing off tolls related to personal travel or commuting.

Delivery equipment and supplies

Since you may need to buy supplies and equipment to safely transport deliveries, the IRS allows deductions for necessary items such as:

• Courier backpacks
• Blankets
• Insulated bags
• Drink holders

If you use these for other purposes too, you can only write off the portion related to delivery use. Note that equipment expenses are only deductible if they are required for doing the job. This means that branded clothing is not deductible, as the delivery platforms does not mandate that you to wear it while on the job. 

Phone expenses

Delivery driver platforms generally require using a smartphone during your deliveries. The IRS lets you take a deduction for expenses such as the phone plan and the device itself. Other deductible expenses can include mobile apps for managing your business or tracking mileage as well as phone accessories, such as holders and car chargers.

You can deduct the full cost if you use these items and your phone plan solely for business. Otherwise, you must keep detailed records and deduct just the work-related portion.

Platform commissions and fees

If the delivery platform takes commissions or fees out of the money you earn, you may deduct these from your gross business income. This can also include fees that the platform charges for cashing out your earnings to your bank account or debit card.

Home office deduction

The IRS allows self-employed individuals to take a home office deduction if they regularly and exclusively use a portion of their homes for business purposes. That means you need a dedicated area where you do administrative work, store inventory or complete other business tasks. You can’t deduct any space with shared use. 

You can choose between these two home office deduction options:

• Simplified method: Rather than calculating individual expenses, you simply deduct up to 300 square feet of qualifying space at $5 per square foot.
• Regular method: After determining the percentage of your home that you use for business, you allocate and calculate individual direct and indirect expenses (such as utilities, repairs, rent/mortgage interest, taxes and insurance). This option requires detailed records and much more work.

While this deduction might seem reasonable if you complete your administrative tasks from home, you can run into issues as a delivery driver since your principal place of business will be away from home. Eligibility is tricky, so consider checking with a tax advisor to reduce the chances of problems with the IRS.

Health insurance premiums

According to IRS Publication 502, you can write off the self-employed health insurance premiums you pay for yourself, your spouse and your children if these two criteria apply:

• You don’t already have health insurance coverage options through your spouse’s employer or a second job – regardless of whether you actually enroll in the plan.
• Your business earns a profit that tax year.

Vision and dental insurance premiums are separately deductible. Plus, you can write off long-term care insurance costs up to age-based limits ($470 to $5,880 for 2024).

Your health insurance deduction amount is limited to your out-of-pocket cost, so you can’t deduct any portion paid for with a government subsidy.

Retirement savings contributions

As a self-employed delivery driver, you may qualify to write off pre-tax contributions to eligible retirement savings plans, such as a traditional IRA, Solo 401(k), SEP IRA or SIMPLE IRA. IRS rules limit how much you can contribute to these accounts and deduct each year.

If you pick a traditional IRA, you can put $7,000 in the account in 2024 – or $8,000 if you’re at least 50 years old. At tax time, you can deduct a partial or full amount of these contributions as long as you don’t exceed adjusted gross income limits that depend on your filing status and access to any employer retirement plan. 

With the other plans, your yearly contributions and deductions are usually limited to a portion of your self-employment income. You can select your plan type on the IRS website for specifics.

Continuing education expenses

While you might be less likely to incur continuing education expenses as a delivery driver, the IRS lets you deduct them if you meet at least one of these criteria:

• You need the training to meet a requirement for keeping your delivery driver position.
• The training helps you maintain or improve your delivery driver skills.

The continuing education must be directly relevant to your delivery driver occupation and not help you qualify for a different career. Plus, it can’t simply help you meet the minimum standard for a delivery driver job.

If eligible, you can deduct expenses such as tuition and fees for training programs and courses, relevant supplies and books, seminars and certain training-related travel costs. You can check our continuing education tax deduction guide for more information.

Tax deductions that delivery drivers can’t claim

You can’t claim deductions for personal expenses and certain business-related expenses that the IRS excludes. While this isn’t an exhaustive list, examples include:

• Most commuting costs to and from your home
• Personal use of business items
• Traffic and parking tickets and fines
• Meals
• After-tax retirement account contributions
• In-car entertainment
• Gifts to customers
• Uniforms (including branded shirts)
• Child care and other family expenses while you work

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