Gross vs. Net Hourly: Why Gig Workers Are Often Overpaid on Paper
Apps report earnings based on active trip time, ignoring time waiting, driving to pickups, or between deliveries. The real hourly calculation must include all time worked (from when you log on to when you log off), minus all expenses. A $25/hr gross active rate often becomes $12–$16/hr net hourly after full accounting.
Annual deductions for a full-time rideshare driver (estimated 15,000 miles/year)
| Deduction | Estimated Annual Cost | Per Active Hour (1,500 hrs) |
|---|---|---|
| Vehicle depreciation (IRS: $0.67/mi) | $10,050 (15K mi/yr) | $6.70/hr |
| Gas (avg 25 mpg, $3.50/gal) | $2,100 (15K mi/yr) | $1.40/hr |
| Auto insurance premium increase | $600–$1,200/yr | $0.40–$0.80/hr |
| SE tax on profit (15.3%) | On net income | ~$2.50/hr at $25 gross |
| Maintenance and repairs | $800–$1,500/yr | $0.50–$1.00/hr |
| Total estimated deductions | ~$14,000–$15,000/yr | ~$9–$10/hr |
Gig workers can deduct business miles at $0.67/mile (2024 rate; check 2025 update). On 15,000 miles, that’s a $10,050 deduction — potentially saving $2,000–$2,500 in taxes. Use a mileage tracking app (MileIQ, Stride) and keep accurate logs. This is your most valuable gig worker tax deduction.
Calculating Your True Net Hourly Rate
Step 1: Record all time logged into the app (not just active trip time). Step 2: Add all earnings for that period. Step 3: Subtract estimated expenses (use IRS mileage rate × miles driven as a proxy for vehicle costs). Step 4: Subtract 15.3% SE tax on net profit. Step 5: Divide remaining income by total hours logged in. That’s your real hourly rate.
When Gig Work Is Worth It (and When It Isn’t)
Gig work generates good net income when: you drive a fuel-efficient vehicle, work peak-demand hours (Friday/Saturday nights, lunch rush), use the mileage deduction, and treat it as supplemental income rather than primary. It’s a poor primary income source when you have a loan on a vehicle being depreciated rapidly, have young children, or need health insurance.
Calculate Your True Gig Worker Annual Income
Factor in all hours, mileage costs, and SE tax to find your real net annual earnings.