True hourly pay after gas, wear, self-employment tax and income tax
Updated October 2026
Benchmark IRS business mileage rate (from July 1, 2026): $0.76/mile (Jul 1, 2026, IRS Announcement 2026-11); regular gasoline, U.S. average: $4.35/gallon (Oct 5, 2026, EIA weekly retail gasoline price).
App earnings are the weekly total in the driver app’s earnings tab, including tips and bonuses. Hours online should include waiting time between requests, not just time on a trip; that is the time you are giving up. Miles driven means every business mile: to pickups, on trips and between requests. Many drivers use a mileage-tracking app or the odometer at the start and end of each shift. Gas price left at 0 uses the latest U.S. average from the EIA ($4.35 a gallon as of October 5, 2026). Maintenance is a per-mile allowance for tires, oil, brakes and wear; 10 cents is a starting point, so use your own records if you have them. Fixed costs are weekly items like the phone plan and a rideshare insurance endorsement, and the tax bracket is your federal marginal rate.
Cash costs = miles ÷ mpg × gas price + miles × maintenance + fixed costs. Taxable profit = app earnings − miles × IRS rate. Self-employment tax = profit × 92.35% × 15.3%. Income tax = bracket × (profit − half of SE tax). Kept = earnings − cash costs − both taxes.
Worked example with the defaults: 700 ÷ 28 = 25 gallons at $4.35 is $108.85. Add $70 of wear and $30 fixed for $208.85 in costs, so you net $691.15 before tax. For taxes, 700 miles × 76¢ = $532 is deducted, leaving $368 of profit. SE tax is $368 × 0.9235 × 0.153 = $52.00 and income tax 12% × ($368 − $26.00) = $41.04. You keep $598.11, or $14.95 for each of the 40 hours, against the $22.50 an hour the app shows.
| Week | Net before tax | Taxes to set aside | Kept | Per hour |
|---|---|---|---|---|
| Default week: $900, 40 h, 700 mi, 28 mpg | $691.15 | $93.04 | $598.11 | $14.95 |
| Same week in a 50-mpg hybrid | $739.04 | $93.04 | $646.01 | $16.15 |
| Same pay but 1,000 miles (more empty driving) | $614.50 | $35.39 | $579.11 | $14.48 |
| Part-time: $400, 20 h, 300 mi | $293.35 | $43.48 | $249.87 | $12.49 |
| Default week in the 22% bracket | $691.15 | $127.24 | $563.91 | $14.10 |
| Default week driven in January to June (72.5¢) | $691.15 | $99.23 | $591.92 | $14.80 |
Fuel economy and empty miles move the result most. The extra 300 miles in the third row cost cash but also add a larger mileage deduction, which is why taxes fall from about $93 to $35 even as take-home drops.
Drivers paid through the apps are self-employed. Self-employment tax is 12.4% for Social Security plus 2.9% for Medicare on 92.35% of net earnings, and it applies once net earnings reach $400 for the year; half of it is deductible. The IRS business mileage rate is 72.5 cents a mile for January through June 2026 and 76 cents from July 1 through December 31, 2026. Parking fees and tolls for business trips are deductible on top of the standard rate. You must use the standard rate in the first year the car is used for business to keep the option of using it later. Taxi and rideshare drivers and goods delivery people, including app-based delivery, are on the Treasury list of occupations that customarily receive tips, so qualifying tips can count toward the no-tax-on-tips deduction; self-employment tax still applies to them.
Counting only time on trips. Hourly pay based on trip time looks far better than pay per hour online, which is what you actually spend.
Not logging miles. The deduction needs records made at the time. Without a log, the IRS can disallow it, and in the default week that would raise taxes from $93 to over $200.
Using one rate for the whole year. 2026 has two rates: 72.5 cents a mile for January through June (IRS Notice 2026-10) and 76 cents from July 1 (IRS Announcement 2026-11). Choose the half-year your week falls in, or use the split option for a year’s miles: 700 miles in the first half deduct $507.50 instead of $532.00, and the default week then keeps $14.80 an hour instead of $14.95; half and half deducts $519.75 (a blended 74.25 cents) and keeps $14.88. Keep your log by date so you can total each half when you file.
Spending the deduction. The mileage deduction lowers tax; it is not cash. The money for gas and repairs still has to come out of earnings.
It leaves out state and local income tax, the qualified business income deduction, the no-tax-on-tips deduction, health insurance, and depreciation beyond what the per-mile wear allowance captures. It treats the week as typical, so annual figures such as the $400 SE threshold and quarterly estimate penalties are not applied. If driving is your main income, a tax preparer can set your quarterly estimates and check whether actual expenses beat the standard rate for your car.