Uber Driver Taxes in Minnesota - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Uber Driver income taxable in Minnesota?

Yes, income earned as an Uber driver is absolutely taxable, both at the federal and Minnesota 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: 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). Even if you don't feel like you made a profit, you must file Schedule C if your gross income from Uber exceeds $400.

Minnesota Specific Rules: Minnesota has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your Uber net profit (from Schedule C) will be added to your other income (like wages from a traditional job, if any) and taxed according to the Minnesota income tax brackets for 2024. You'll use Form M1040 to calculate your Minnesota income tax liability. Minnesota also has standard and itemized deductions, similar to the federal system, which can reduce your taxable income.

Top Tax Write-offs for Uber Drivers

As a self-employed Uber driver, you can significantly reduce your tax bill by taking advantage of available deductions. Here are some key write-offs:

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per business mile driven. Keep a detailed log of all miles driven for Uber (from accepting a ride request to dropping off the passenger). You can also deduct parking fees and tolls related to those trips.
• 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 and is often more beneficial if you have significant vehicle expenses. You cannot switch between methods year to year.
• Uber App Fees & Software: The fees Uber charges you, as well as the cost of any tax preparation software or apps used specifically for tracking your Uber income and expenses, are deductible.
• Phone Expenses: If you use your personal phone for Uber-related activities (navigation, accepting rides, etc.), you can deduct the percentage of your phone bill that corresponds to business use. Keep records to support this calculation.

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 adjusted gross income on Form 1040, which lowers your overall tax liability. However, it's important to be prepared for this additional tax burden, especially if you're used to having taxes automatically withheld from a traditional paycheck.

Closing Tip for Minnesota Residents

Navigating self-employment taxes can be complex. As a Minnesota resident, remember to keep accurate records of all your Uber income and expenses throughout the year. Consider using accounting software or working with a qualified tax professional (like myself!) to ensure you're taking all eligible deductions and complying with both federal and Minnesota tax laws. Proactive tax planning can save you money and headaches come tax season. Don't hesitate to seek professional guidance – it's an investment in your financial well-being!