Delivery drivers and rideshare drivers are both on the Treasury's list of occupations that customarily received tips (the transportation and delivery group). So the tips customers add in the app can be qualified tips, deductible up to $25,000 on Schedule 1-A.
What counts
- Counts: tips the customer chose to add in the app, before or after the trip or delivery, and cash tips you record.
- Doesn't count: base pay, fares, peak pay, promotions, guaranteed earnings top-ups or any fee the customer had to pay.
The profit limit matters for drivers
Most app drivers are self-employed, so the deduction can't be more than your net profit from driving, after expenses like mileage. A driver with high mileage and low fares might have less profit than tips. Example: $7,000 of tips, $24,000 net profit, single, $38,000 total income: the full $7,000 is deductible and saves about $840 in federal income tax.
How your tips are reported
Platforms send Forms 1099-K or 1099-NEC, and from 2026 they can report qualified tips separately. Keep your in-app earnings statements, which show tips line by line, in case the form doesn't break them out.
Don't forget
- Self-employment tax still applies to tips.
- Your state may still tax tips: check your state.
- If you also have a W-2 job with tips, all qualified tips share one $25,000 cap.
Choose “Self-employed (1099)” in the tips calculator to include the profit limit.
Common questions
Do DoorDash drivers qualify for no tax on tips?
Yes. Delivery drivers are on the Treasury's list. Customer tips can be deducted, limited to net profit from that work.
Do Uber and Lyft drivers qualify?
Yes. Taxi and rideshare drivers are on the list.
Is base pay or peak pay a tip?
No. Only amounts the customer voluntarily added as a tip count.
Sources
See how Taxlumo calculates and our editorial policy.