Uber Driver Taxes in Colorado - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Uber Driver income taxable in Colorado?

Yes, income earned as an Uber driver is absolutely taxable, both at the federal and Colorado state levels. As an independent contractor, you're considered self-employed by the IRS and the Colorado Department of Revenue. This means you're responsible for reporting your earnings and paying all applicable 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). It's crucial to keep accurate records of all income received from Uber and all related business expenses.

Colorado Specific Rules: Flat Income Tax – Colorado has a flat income tax rate of 4.40% for the 2024 tax year (filing in 2025). Your net profit from Schedule C will be added to your other income, and this total taxable income will be subject to the 4.40% rate. Colorado also requires you to file a state income tax return (Form DR 0104) to report your income and calculate your state tax liability.

Top Tax Write-offs for Uber Drivers

As an Uber driver, you can significantly reduce your tax liability by taking advantage of various deductions. Here are some key write-offs:

• Mileage: This is often the largest deduction. For 2024, the standard mileage rate is 67 cents per mile for business use. You must keep a detailed mileage log documenting the date, purpose (Uber trip), and miles driven. You can not use this rate if you claim actual expenses (see below).
• Actual Car Expenses: Instead of the standard mileage rate, you can deduct the actual costs of operating your vehicle, such as gas, oil changes, repairs, maintenance, insurance, registration fees, and depreciation. You'll need to keep detailed receipts for all these expenses. You must choose either the standard mileage rate or actual expenses – you can’t switch back and forth year to year.
• Uber-Specific Fees & Software: You can deduct the fees Uber charges you (e.g., service fees). Also, any subscription costs for apps or software used specifically for driving (e.g., GPS navigation, driver tracking apps) are deductible.
• Business Portion of Cell Phone: If you use your cell phone for Uber-related activities (navigation, accepting rides, communication with Uber), you can deduct the percentage of the phone bill attributable to business use.

The 15.3% Self-Employment Tax Surprise

Because you're self-employed, you're responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This combined tax is called self-employment tax and totals 15.3% (12.4% for Social Security up to the annual wage base, and 2.9% for Medicare). You'll calculate this on Schedule SE (Self-Employment Tax).

The good news is you get to deduct one-half of your self-employment tax from your gross income on Form 1040, which reduces your overall tax liability. However, be prepared for this additional tax – it’s often a surprise to new Uber drivers!

Closing Tip for Colorado Residents

Tax laws can be complex, and it’s easy to miss deductions or make errors. Consider using tax software designed for self-employed individuals or consulting with a qualified tax professional, especially in Colorado where state tax laws can have specific nuances. Keeping meticulous records throughout the year will make filing your taxes much smoother and ensure you’re paying the correct amount. Don't wait until the last minute – start organizing your Uber income and expenses now to avoid stress during tax season!