Uber Driver Taxes in Iowa - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Uber Driver income taxable in Iowa?

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

Federal Requirements: You'll report your Uber income and expenses on Schedule C (Profit or Loss From Business), which is filed with your Form 1040. This form calculates your net profit (income minus expenses). The net profit is then added to your other income when calculating your Adjusted Gross Income (AGI).

Iowa Specific Rules: Iowa has a graduated income tax system. This means the tax rate you pay depends on your taxable income. Your net profit from Schedule C will be included in your Iowa taxable income, and taxed according to the 2024 Iowa tax brackets (which will be available when filing in 2025). You'll file Iowa Form 1040 and potentially other Iowa schedules depending on your overall tax situation. Iowa also allows for itemized deductions, which may further reduce your taxable income. The Iowa Department of Revenue website (tax.iowa.gov) will have the most up-to-date bracket information and forms.

Top Tax Write-offs for Uber Drivers

As an 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 mile for business use. Keep a detailed log of all miles driven for Uber, including the date, starting and ending locations, and business purpose. You can use apps to track this automatically.
• 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 more detailed record-keeping. Generally, the mileage method yields a larger deduction, but compare both methods to see what benefits you most.
• Phone Expenses: If you use your personal phone for Uber-related activities (navigation, driver app, communication with passengers), you can deduct the percentage of the phone bill attributable to business use.
• Uber-Specific Fees & Software: Any fees paid directly to Uber, as well as the cost of any tax preparation software specifically used for your Uber income, are deductible.

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. This helps offset the impact of this tax. However, it's important to be prepared for this additional tax liability, as it's often a surprise to new self-employed individuals. You only pay self-employment tax on profits over $400.

Closing Tip for Iowa Residents

Navigating self-employment taxes can be complex. I strongly recommend keeping meticulous records of all your income and expenses throughout the year. Consider using accounting software designed for freelancers or consulting with a qualified tax professional, especially one familiar with Iowa tax laws. The Iowa Department of Revenue website (tax.iowa.gov) is a valuable resource for state-specific information. Proactive planning and accurate record-keeping will help ensure you comply with all tax requirements and maximize your deductions.