Uber Driver Taxes in Arizona - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Uber Driver income taxable in Arizona?

Yes, income earned as an Uber driver is absolutely taxable, both at the federal and Arizona state levels. As an independent contractor, you are considered self-employed by the IRS and the Arizona Department of Revenue. This means you're responsible for reporting all earnings and paying the associated taxes.

Federal Requirements: Schedule C – You’ll report your Uber income and expenses on Schedule C (Profit or Loss From Business) when you file your federal income tax return (Form 1040). This form calculates your net profit (income minus expenses), which is then added to your other income to determine your adjusted gross income (AGI).

Arizona Specific Rules: Flat Income Tax – Arizona has a flat income tax rate. For the 2024 tax year (filing in 2025), the rate is 2.5%. Your Arizona taxable income is calculated similarly to the federal level – starting with your AGI and then applying any allowable deductions specific to Arizona. The net profit calculated on your federal Schedule C will be included in your Arizona income tax calculation.

Top Tax Write-offs for Uber Drivers

As a self-employed Uber driver, you can significantly reduce your tax liability by claiming eligible business expenses. Here are some key deductions:

• Mileage: This is often the largest deduction! For 2024, the standard mileage rate is 67 cents per business mile driven. Keep a detailed log of all miles driven for Uber, including the date, starting and ending locations, and business purpose. You can't use actual expenses (gas, oil, repairs) if you take the standard mileage rate.
• Vehicle Expenses (Alternative to Mileage): Instead of the standard mileage rate, you can deduct the actual costs of operating your vehicle, such as gas, oil changes, repairs, insurance, registration fees, and depreciation. You must choose one method (standard mileage or actual expenses) and be consistent.
• Uber App Fees & Software: The fees you pay to Uber, as well as any subscription costs for tax preparation software or apps used to track your income and mileage, are deductible.
• Phone Expenses: If you use your personal phone for Uber-related activities (navigation, accepting rides, communication), you can deduct the percentage of the phone bill attributable to business use. Keep records to support this calculation.

The 15.3% Self-Employment Tax Surprise

Many Uber drivers are surprised to learn about self-employment tax. When you're an employee, your employer pays half of your Social Security and Medicare taxes. As a self-employed individual, you're responsible for both the employer and employee portions – a total of 15.3%.

Schedule SE (Self-Employment Tax) – This tax is calculated on Schedule SE, which you’ll file along with your Form 1040. You'll pay self-employment tax on 92.35% of your net earnings from Schedule C. However, you do get to deduct one-half of your self-employment tax from your AGI, which can lower your overall tax bill.

Important Note: Self-employment tax applies to earnings over $400.

Closing Tip for Arizona Residents

Tax laws can be complex, and it's easy to miss deductions or make errors. Consider consulting with a qualified tax professional, especially in your first year as an Uber driver, to ensure you're maximizing your deductions and complying with all federal and Arizona state tax requirements. Keeping meticulous records of your income and expenses throughout the year will make tax time much smoother. Good luck, and drive safely!