Uber Driver Taxes in Illinois - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Uber Driver income taxable in Illinois?

Yes, income earned as an Uber driver is absolutely taxable, both at the federal and Illinois state levels. The IRS considers you self-employed, not an employee of Uber. 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 detailed records of all income and expenses throughout the year.

Illinois Specific Rules: Flat Income Tax – Illinois has a flat income tax rate for 2024, currently at 4.95%. Your net profit from Schedule C will be added to your other income, and this total taxable income will be subject to the 4.95% Illinois income tax rate. Illinois also requires you to file Form IL-1040 to report your state income tax liability.

Top Tax Write-offs for Uber Drivers

As a self-employed 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 business mile driven. You must keep a detailed mileage log documenting the date, purpose (business vs. personal), and miles driven for each trip. You can't use the standard mileage rate if you've previously claimed depreciation on your vehicle.
• Vehicle Expenses (Alternative to Mileage): Instead of the standard mileage rate, you can deduct the actual expenses of operating your vehicle, such as gas, oil changes, repairs, insurance, registration fees, and depreciation. This requires meticulous record-keeping. Generally, the mileage method yields a larger deduction, but it's worth comparing.
• Uber-Related Fees & Software: Any fees paid to Uber (service fees, etc.) are deductible. Also, the cost of any software or apps you use specifically for driving (e.g., tax tracking apps, GPS navigation) can be deducted.
• 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 is currently 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, it's important to be prepared for this additional tax burden, especially if you're used to having taxes withheld from a traditional paycheck.

Closing Tip for Illinois Residents

Navigating self-employment taxes can be complex. As an Illinois Uber driver, maintaining accurate records of your income and expenses is paramount. Consider using accounting software or working with a qualified tax professional to ensure you're maximizing your deductions and complying with all federal and state tax laws. Don't wait until the last minute – proactive tax planning can save you time, money, and potential headaches.