If you deliver for Grubhub, the IRS treats you as an independent contractor, which means Grubhub driver taxes come in two layers: federal income tax on your net profit, plus a 15.3% self-employment tax that covers Social Security and Medicare. Nothing is withheld from your pay, so you’re expected to set the money aside yourself and send it to the IRS in quarterly installments.
State income tax may apply on top, depending on where you live.
What Grubhub Reports and What You Owe Tax On
For the 2026 tax year, Grubhub must send you a Form 1099-NEC if it paid you $2,000 or more during the year. That threshold went up from $600 under legislation covering payments made after December 31, 2025.1Internal Revenue Service. Form 1099-NEC and Independent Contractors The number on the 1099-NEC is gross payments, before any of your expenses, so it will look larger than what actually landed in your pocket.
Not getting a 1099 doesn’t mean the income is tax-free. If you earned less than $2,000 with Grubhub, you still owe tax on every dollar. The threshold only controls whether Grubhub files paperwork. Drive for more than one platform and the threshold applies separately to each: $1,500 from Grubhub and $1,800 from another app produces no 1099s, and you still owe tax on $3,300.
What you actually pay tax on is your net profit, which is gross earnings minus your business deductions. Track expenses carefully and the tax bill shrinks in two places at once, because both income tax and self-employment tax are calculated on that same net profit figure.
The Self-Employment Tax
Self-employment tax is 15.3% total: 12.4% for Social Security and 2.9% for Medicare.2Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) It doesn’t apply to gross income. It applies to 92.35% of your net earnings from self-employment.3Internal Revenue Service. Topic No. 554, Self-Employment Tax
One built-in break: you deduct half of your self-employment tax when calculating your adjusted gross income. This doesn’t reduce the self-employment tax itself, but it lowers the income figure used for regular income tax.4Internal Revenue Service. Schedule SE (Form 1040) – Self-Employment Tax
Paying Quarterly So You Don’t Get Penalized
Because no employer is withholding on your behalf, the IRS wants its money throughout the year. If you expect to owe $1,000 or more in combined income and self-employment tax, you’re required to make estimated payments using Form 1040-ES.5Internal Revenue Service. Estimated Taxes Anyone driving regularly will hit that line fast.
Payments fall on four dates:6Internal Revenue Service. When to Pay Estimated Tax
- April 15, covering January through March
- June 15, covering April and May
- September 15, covering June through August
- January 15 of the following year, covering September through December
The periods aren’t equal, and a deadline landing on a weekend or holiday moves to the next business day.
Safe Harbor
You avoid an underpayment penalty if your payments add up to at least the lesser of 90% of the current year’s total tax or 100% of the prior year’s total tax.7Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty If your prior-year adjusted gross income was over $150,000 ($75,000 if married filing separately), the prior-year figure rises to 110%.8Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax The simplest route for most drivers: take last year’s total tax, divide by four, and pay that each quarter. You’re protected even if your income jumps.
What Skipping Costs
Skip a payment and the IRS applies its current interest rate to the shortfall for the time it was overdue.8Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax A single missed quarter isn’t devastating, but the charge compounds across all four and the rate resets quarterly. Waiting until April and paying everything then often wipes out any benefit from holding onto the cash.
Deductions That Cut the Bill
Vehicle Expenses
Driving costs are almost always the biggest deduction. The IRS gives you two methods.9Internal Revenue Service. Topic No. 510, Business Use of Car
The standard mileage rate for 2026 is 72.5 cents per business mile.10Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile That rate already covers gas, depreciation, insurance, maintenance, and repairs. Log 20,000 business miles and you have a $14,500 deduction without collecting a single fuel receipt. You still need a mileage log with the date, destination, business purpose, and miles for each trip. Apps like Everlance or Stride can handle this in the background.
The actual expense method has you track every vehicle cost (fuel, oil, tires, repairs, insurance, registration, depreciation) and deduct the business-use percentage. If 70% of your miles are for delivery work, you deduct 70% of those totals. Sometimes this yields a larger deduction, especially with an expensive vehicle, but the recordkeeping is heavier.
A trap worth knowing: if you lease and pick the standard mileage rate in year one, you’re locked into that method for the entire lease, including renewals.11Internal Revenue Service. Income and Expenses 5 For a vehicle you own, choosing actual expenses in year one blocks the standard rate for that vehicle later on.
Phone, Supplies, Tolls
Deduct the business-use percentage of your phone bill and data plan. Be honest with the split; an inflated number invites scrutiny. Insulated bags, phone mounts, and car chargers bought for delivery work are fully deductible. Tolls and parking fees during deliveries are deductible at 100%, whether you use the standard mileage rate or actual expenses.
Home Office
If you use a defined area of your home regularly and exclusively for the business side of driving (tracking expenses, records, communications), you may qualify for the home office deduction. The simplified method is $5 per square foot up to 300 square feet, capping at $1,500.12Internal Revenue Service. Simplified Option for Home Office Deduction A space that doubles as a guest room won’t qualify. “Regular and exclusive” means what it sounds like.
The Qualified Business Income Deduction
On top of your business expenses, you may deduct up to 20% of your net business income under Section 199A.13Internal Revenue Service. Qualified Business Income Deduction The deduction was originally set to expire after 2025 and was made permanent by the One Big Beautiful Bill Act.
In practical terms: a $30,000 net profit on Schedule C could produce a $6,000 QBI deduction. It only cuts your income tax, not your self-employment tax, but sole proprietors like Grubhub drivers are among the eligible business types, and you can claim it whether you take the standard deduction or itemize. For most drivers below the higher-income phase-out thresholds, the math is simply 20% of net delivery profit.
Health Insurance and Retirement
If you pay for your own health, dental, or vision coverage and aren’t eligible for a spouse’s employer plan, you can deduct 100% of the premiums. The deduction extends to your spouse, dependents, and any child under 27 whether or not they’re your dependent. It goes on Schedule 1 using Form 7206 and reduces adjusted gross income directly, but it can’t exceed your net self-employment income for the year.14Internal Revenue Service. Instructions for Form 7206
Two retirement accounts do double duty by lowering your current tax bill:
- A SEP IRA lets you contribute the lesser of 25% of net self-employment earnings or $72,000 for 2026, with no annual filing requirements.15Internal Revenue Service. SEP Contribution Limits (Including Grandfathered SARSEPs)
- A solo 401(k) allows employee deferrals up to $24,500 for 2026 (with catch-up amounts of $8,000 at age 50 or older, or $11,250 at ages 60 through 63), plus profit-sharing on top, with a combined cap of $72,000.16Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026
The SEP IRA is simpler for typical gig income. The solo 401(k) lets you contribute more at lower profit levels, since the employee deferral piece doesn’t depend on your income percentage.
How Filing Actually Works
Three forms carry the weight: Schedule C, Schedule SE, and Form 1040.
Schedule C is where you report gross delivery income (from your 1099-NEC plus anything not on a 1099) and list every business deduction: vehicle expenses, phone, supplies, and the rest. The bottom line is your net profit.17Internal Revenue Service. Schedule C (Form 1040) – Profit or Loss From Business
Schedule SE takes that net profit, multiplies by 92.35%, applies the 15.3% rate, and calculates the half-deduction that flows back to Schedule 1.4Internal Revenue Service. Schedule SE (Form 1040) – Self-Employment Tax
Form 1040 combines your net profit with any other income (W-2 wages, investments), adds the self-employment tax, and credits any estimated payments you made during the year.18Internal Revenue Service. About Form 1040-ES Overpayment gets refunded; anything owed is due by the filing deadline.
Your 2026 return is due April 15, 2027. An extension moves the filing date to October 15, 2027, but it does not push back the payment. Tax owed is still due April 15.
Records to Keep
The IRS asks you to keep records supporting your return for at least three years from the filing or due date, whichever is later.19Internal Revenue Service. How Long Should I Keep Records Underreport income by more than 25% and that stretches to six years. Never file and there’s no statute of limitations at all.
For a driver, the records that matter are your mileage log, expense receipts, 1099s, bank statements from any account used for delivery income, and copies of your filed returns. Digital is fine as long as it’s legible and backed up. If the IRS questions your vehicle deduction and you can’t produce a log, the whole deduction can be disallowed, which is a lot of money to lose over a file an app could have kept for you automatically.