Can You Write Off a Car Bought for Uber? Methods, Caps, Records

Yes, you can write off a car you bought for Uber, because the vehicle is a business asset and both its purchase price and its operating costs are deductible against your rideshare income on Schedule C. The write-off comes through one of two methods: the standard mileage rate (72.5 cents per business mile in 2026) or the actual expense method, which is the only route that lets you depreciate the car’s purchase price directly.¹ Which method serves you better depends on the price of the car, how many miles you drive, and what you spend keeping it on the road. And the choice you make in the first year the car is available for Uber constrains your options for the life of the vehicle, so it deserves attention before you file.

The Two Methods for Writing Off the Car

You must pick one method per vehicle per year. You cannot mix them in the same year for the same car.

Standard Mileage Rate

Multiply your business miles by 72.5 cents. That’s the deduction. The IRS has already folded depreciation, fuel, insurance, maintenance, and repairs into the per-mile figure, so you don’t claim those items separately.¹ Parking fees and tolls incurred on business trips are deductible on top of the mileage.

For a driver logging 30,000 business miles in a reliable, fuel-efficient car, the standard rate produces a $21,750 deduction with no gas receipts to organize. High-mileage drivers with cheaper vehicles usually come out ahead here.

Actual Expense Method

You track every cost of running the car: gas, oil changes, tires, repairs, insurance premiums, registration fees, loan interest, and car washes. Add them up, then multiply by your business use percentage (business miles divided by total miles for the year). Depreciation on the car itself gets added into that same actual-expense pot.

The real leverage of this method is the depreciation piece. If you paid $45,000 for the vehicle, actual expenses let you write off portions of that price over time, potentially a large share in year one. Expensive cars with high operating costs usually deduct more under this method than under the mileage rate.

The First-Year Choice Locks You In

The IRS puts a one-directional gate on this decision. To ever use the standard mileage rate for a car you own, you have to choose it the first year the vehicle is available for business. You can switch to actual expenses in a later year if it becomes more favorable. Pick actual expenses in year one and you’re barred from the mileage rate on that vehicle for good.²

If you’re unsure, starting with the mileage rate preserves the option to switch. One catch on the switch: after using the standard rate, you must depreciate the car using straight-line rather than accelerated methods, and your depreciable basis is reduced by a set per-mile amount for every mile previously deducted at the standard rate.³

Leased vehicles are stricter. Choose the standard mileage rate on a lease and you must stay on it for the entire lease period, including any renewals.²

Depreciating the Purchase Price

The cost of the car is a capital expense, so you recover it through depreciation instead of deducting the whole price in the year you bought it. Depreciation is only available under the actual expense method. Passenger cars have a five-year recovery period, but two acceleration tools can pull much of that deduction into year one.

Section 179 and Bonus Depreciation

Section 179 lets you expense the business portion of the purchase price in the year you place the car in service, up to an overall 2026 ceiling of $2,560,000, which no rideshare driver will approach.⁴

Bonus depreciation was restored to 100% by the One Big Beautiful Bill for property acquired after January 19, 2025, letting you deduct the entire remaining depreciable basis in year one.⁵ For passenger cars, though, the practical ceiling on both tools is the luxury auto cap below, so 100% bonus rarely means a full first-year write-off.

Luxury Auto Caps for 2026

These caps apply to every passenger car, not just expensive models. For a vehicle placed in service in 2026 with bonus depreciation applied:⁶

Year 1: $20,300
Year 2: $19,800
Year 3: $11,900
Year 4 and beyond: $7,160 per year until the cost is fully recovered

Opt out of bonus depreciation and the year-one cap drops to $12,300; the later years are unchanged.⁶

The cap is applied before your business use percentage. If you use the car 75% for Uber and the year-one cap is $20,300, your actual first-year deduction is $15,225. Anything you couldn’t take because of the cap carries forward at $7,160 per year (times your business use percentage) until the full business share of the cost is recovered. A $40,000 sedan used 80% for Uber will take several years to fully depreciate.

Heavy Vehicles Over 6,000 Pounds

Vehicles with a gross vehicle weight rating above 6,000 pounds sit outside the luxury auto caps. That covers most full-size SUVs, cargo vans, and full-bed pickups. A driver using a qualifying heavy vehicle for Uber XL or Uber Black can deduct a much larger share of the price in year one.

SUVs over 6,000 pounds GVWR have their own Section 179 sub-limit of $32,000 for 2026. Non-SUV heavy vehicles (cargo vans, heavy pickups) don’t face that sub-limit. After the Section 179 piece, 100% bonus depreciation applies to the remaining basis, which can produce a full year-one write-off of the business-use portion of the vehicle.

The 50% Business Use Threshold

Section 179 and bonus depreciation both require more than 50% business use during the year. If your business use later drops to 50% or below, you have to recapture the excess depreciation and report it as ordinary income.⁷ Drivers who plan to scale back their hours over time should model that risk before front-loading depreciation.

Which Miles Actually Count

Not every mile counts as business, and getting this wrong distorts every calculation that follows. The drive from home to your first passenger pickup and the drive home after your last drop-off are generally commuting, not business. Only miles between your first business stop and your last are deductible.

There’s an exception. If you use a dedicated area in your home exclusively and regularly for the administrative side of your driving business, and you have no other fixed office, that space can qualify as your principal place of business.⁸ When it does, the trip from home to your first pickup becomes a business trip. The space has to be a distinct area used only for business, not shared with personal use.

Miles driven while the Uber app is on and you’re waiting for a request (deadhead miles) count as business. Personal errands between rides do not. This distinction drives your business use percentage under the actual expense method, and it determines your total mileage deduction under the standard rate.

Operating Costs Alongside the Car

Under actual expenses, everything it takes to run the car is deductible in proportion to your business use percentage. Under the standard mileage rate, most of it is already inside the per-mile figure.

Fuel, Maintenance, and Insurance

Gas, oil changes, tires, brake work, other repairs, insurance premiums, and annual registration fees are all deductible under actual expenses, each multiplied by your business use percentage. A $1,200 annual premium at 70% business use yields an $840 deduction. Car washes and detailing to keep the vehicle presentable for passengers count too.

Loan Interest and Lease Payments

Financed the car? The interest you paid over the year is deductible in proportion to business use. Principal payments are not, because the cost of the car itself is recovered through depreciation.

Leasing instead? The lease payments are deductible (times business use percentage), but the IRS requires a “lease inclusion amount” adjustment for higher-value vehicles that reduces the deduction. The adjustment prevents lessees from getting a bigger write-off than buyers would through depreciation, and the amounts are published annually by the IRS.³

Phone, Tolls, and Parking

The business portion of your cell phone bill and data plan is deductible on Schedule C. Cell phones are no longer classified as listed property, so the burdensome recordkeeping that category once required is gone.⁹ Estimate the business share of your usage and apply it to your monthly bill. A second phone used exclusively for driving is 100% deductible.

Tolls and parking paid while driving for Uber are fully deductible regardless of which method you use for the car itself. A toll paid on the way to a pickup or while transporting a passenger is 100% deductible because the cost was incurred entirely for business. Parking at home or during personal errands doesn’t qualify.

What Happens When You Sell the Car

When you sell, trade in, or otherwise dispose of a car you’ve been depreciating, the IRS wants some of that depreciation back. Any gain up to the amount of depreciation you previously deducted is taxed as ordinary income rather than at the lower capital gains rate. This is depreciation recapture, and it applies to Section 1245 property, which includes vehicles.⁷

Say you paid $35,000 for the car, claimed $18,000 in depreciation over several years, and sold it for $20,000. Your adjusted basis is $17,000, so your gain is $3,000. All of it sits within the depreciation you previously claimed, so all of it is taxed at ordinary rates. Any gain above the total depreciation taken would be taxed at capital gains rates. Report the sale on Form 4797.

Recapture still applies if you used the standard mileage rate. The IRS treats a portion of each year’s mileage deduction as depreciation, and that built-in depreciation feeds a recapture calculation when you sell. Drivers who aggressively front-load the write-off through Section 179 or bonus depreciation should budget for the tax hit at disposal.

No EV Credit for 2026 Purchases

If you’re eyeing an electric vehicle for Uber, know that the Section 30D new clean vehicle credit was terminated for vehicles acquired after September 30, 2025.¹⁰ The previously-owned clean vehicle credit ended on the same date.¹¹ For 2026, no federal tax credit is available for buying a new or used EV. An electric car can still be a strong economic fit for rideshare because of lower fuel and maintenance costs, but there’s no credit to work into the purchase math.

Records That Keep the Deduction

The burden of proof sits with you. A deduction you can’t document is a deduction you’ll lose.

The Mileage Log

You need a mileage log under either method. The log has to be kept at or near the time of each trip, not reconstructed at year end from memory. A weekly log is timely; a December estimate is not. Each entry needs the date, the destination, the business purpose, and the miles driven.³

For rideshare, the business purpose is repetitive (“Uber passenger transport”) but still has to be recorded. GPS-based mileage apps that log trips automatically are the cleanest way to meet the contemporaneous requirement. Record your odometer on January 1 and December 31 so you can compute total annual miles and your business use percentage.

Expense Documentation

Under actual expenses, every deduction needs a receipt or record showing amount, date, and vendor. Fuel receipts, repair invoices, insurance statements, and loan interest statements should be organized by category and stored digitally. Bank or credit card statements are acceptable for small recurring costs like car washes. Keep original invoices for major repairs.

Hold all tax records at least three years from the date you file the return.¹² If you claim depreciation on the car, keep records for as long as you own it plus three years after the return reporting its sale. Those depreciation records are what you’ll use to calculate recapture when you dispose of the vehicle.

1
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
2
Internal Revenue Service. Topic No. 510, Business Use of Car
3
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
4
Internal Revenue Service. Publication 946 (2025), How to Depreciate Property
5
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
6
Internal Revenue Service. Rev. Proc. 2026-15
7
Internal Revenue Service. Instructions for Form 4797
8
Legal Information Institute. Definition: Principal Place of Business from 26 USC 280A(c)(1)
9
Internal Revenue Service. IRS Issues Guidance on Tax Treatment of Cell Phones
10
Office of the Law Revision Counsel. 26 U.S. Code 30D – Clean Vehicle Credit
11
Internal Revenue Service. Used Clean Vehicle Credit
12
Internal Revenue Service. How Long Should I Keep Records?