Here is the short answer. A safe starting point is to move 25 to 30 percent of your profit into a separate account for taxes, not 25 to 30 percent of everything the apps deposit. That word profit is the whole game. Most advice you will read says set aside 30 percent of what you make, and for a driver that number is usually too high, because your car eats a big chunk of your pay before any tax is owed on it. Set aside a share of what is left after mileage, and you will hold back close to the right amount instead of starving your own paychecks all year.

Below is why the flat 30 percent rule misleads drivers, and how to land on a number that actually fits your driving.

Why nobody withholds anything for you

At a regular job, taxes come out of every check before you ever see the money. As a gig driver you are a 1099 contractor, so DoorDash, Uber, Instacart, and Spark hand you the full amount and leave the taxes to you. That feels like more money in the moment, and it is the trap. Come April or the next quarterly deadline, the government wants its share, and if you spent all of it you are scrambling. Setting money aside as you go is how you avoid that.

What you owe is two things stacked together. First there is regular income tax, at whatever rate your total income lands in. Second, and this is the one that surprises first-year drivers, is the 15.3 percent self-employment tax. A normal job hides half of that inside your paycheck and your employer pays the other half. As your own boss you pay both halves yourself, on top of income tax.

Why 30 percent of gross is the wrong number for drivers

The generic advice to hold back 30 percent works fine for a freelancer with almost no business costs, like a writer or a consultant. Nearly everything they earn is taxable, so 30 percent of gross is close to 30 percent of profit.

Driving is different, because you have one enormous deduction that a desk worker does not: your miles. The IRS lets you deduct 76 cents for every business mile you drive in the second half of 2026, and that number comes straight off your taxable income. It is not a small adjustment. A driver who runs a lot of miles can wipe out a third or more of their gross before any tax is figured. If you set aside 30 percent of gross, you are holding back tax money on income you will never actually be taxed on, and quietly underpaying yourself every week. We break the deduction down in our mileage deduction guide.

A real week, with the math

Say you gross $1,000 in a week and you drove 700 miles to earn it. This is an illustrative example, not a promise about your own week.

Your mileage deduction is 700 times 0.76, which is $532. Subtract that from the $1,000 and your taxable profit for the week is about $468. That is the number the tax actually lands on, not the full grand. Now hold back roughly a quarter to a third of that $468 for taxes, which is somewhere around $117 to $155. Compare that to the flat rule, where 30 percent of the $1,000 gross would have you setting aside $300. You would be locking away nearly twice what you owe, and wondering why driving never seems to pay.

Run it the other way and the same logic protects you. On a low-mileage week where you grossed $1,000 in only 300 miles, your deduction is just $228, your taxable profit is around $772, and you should be setting aside more, closer to $190 to $250. Same gross both weeks, very different tax owed, entirely because of the miles. This is why a single flat percentage of gross is a blunt tool. Your real number moves with how far you drive.

The catch: you only get the mileage deduction if you tracked the miles

Everything above depends on one thing. The IRS only lets you deduct miles you can actually document, with the date, the distance, and the business purpose. A guess at the end of the year does not hold up if you are ever asked to back it up. Drivers who do not log their miles end up leaving that 76-cents-a-mile deduction on the table, which means they really do owe closer to the scary 30-percent-of-gross number, and they overpay for no reason other than missing records.

So the honest version of the set-aside rule has two parts. Track every business mile as you drive, and set aside 25 to 30 percent of your profit after those miles come out. Do both and your tax bill is smaller and no longer a surprise. Do neither and you are stuck holding back a third of everything just to be safe.

Where to put the money, and when it is due

Move your set-aside into a separate account the day you get paid, not at the end of the month. If it sits in your checking account it will get spent, because money that is reachable is money that is gone. A plain second savings account works fine. The point is to make the tax money slightly annoying to touch.

The other half of this is timing. The IRS does not want your self-employment tax once a year. It expects four estimated payments across the year, and missing them can add a penalty even if you pay in full by April. That is a separate topic with its own dates, and we cover it in the quarterly tax guide. For now, the set-aside habit is what makes those payments painless when they come due.

Estimate your own week

Put a real weekly payout and your rough miles into the calculator below. It uses the current IRS mileage rate, so it shows your after-costs profit, which is the number your set-aside should be a percentage of.

The same idea runs through everything about gig pay. The number the app shows you is never the number you keep, and taxes are just one more cost sitting between the two. If you want to see how the whole picture fits together, our post on what DoorDash drivers actually keep after costs walks through gas, wear, and taxes on one paycheck.

This is the exact job Giggie was built for. It logs your GPS miles automatically with the date attached, so the deduction is documented and not a guess, and it runs your self-employment tax estimate in real time as you drive. Instead of picking a percentage and hoping, you see the actual set-aside number climb with each shift, and you always know what to move into the tax account. Free for 7 days, then $2.99 a month.

The takeaway

Do not set aside 30 percent of everything the apps pay you. Set aside 25 to 30 percent of your profit after the mileage deduction, which for most drivers is a noticeably smaller and more accurate number. The one thing you cannot skip is tracking the miles, because that deduction is what shrinks the bill in the first place. Log the miles, hold back a share of what is left, and move it somewhere you will not spend it. Do that and tax season stops being the thing that wrecks your year.