Uber drivers and Lyft drivers are not considered “employees” by the IRS. Instead, they're classified as independent contractors, meaning the rideshare services don't withhold taxes from their payments. Independent contractors also receive a 1099 at year-end rather than a W-2.

In 2026, in the United States, Uber drivers are classified as 1099 Independent Contractors for tax purposes. This means that Uber does not "withhold" any taxes from your paychecks throughout the year; you are responsible for paying your own Federal, State, and Social Security taxes. Because you are essentially "Self-Employed," you must pay the Self-Employment Tax (currently 15.3%), which covers both the employer and employee portions of Social Security and Medicare. However, the "upside" of this classification is the ability to deduct your business expenses. In 2026, the most significant deduction is the "Standard Mileage Rate" (which has risen to roughly $0.69 per mile in some states), which covers the wear and tear, fuel, and insurance of your vehicle. You can also deduct "business-use" portions of your cell phone bill, data plan, and even the "mints and water" you provide for passengers. Because no taxes are withheld, 2026 tax law strongly recommends that Uber drivers make Estimated Quarterly Tax Payments to avoid a massive "sticker shock" and IRS penalties when they file their Form 1040 in April.