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Washington taxes for delivery and rideshare drivers (2026)
Washington has no individual income tax for 2026, so there is no state return for your driving profit. What it does have is a tax on gross income: rideshare driving counts as hauling for hire, which the Department of Revenue taxes under the public utility tax at 0.642% or 1.926% of gross receipts, with no deduction for mileage or fuel. Whether you owe it depends on how much you gross and how often you file.
This makes Washington different from Texas and Florida, where a sole-proprietor driver has no state tax on driving income at all. Below are the rules, the thresholds, and two drivers run through the same engine as our 1099 gig tax calculator.
Key numbers
| Item | What applies |
|---|---|
| Personal income tax (2026) | None. A 9.9% tax for annual adjusted gross income exceeding $1 million starts January 1, 2028 (SB 6346) |
| Rideshare driving | Public utility tax, motor or urban transportation, instead of B&O tax |
| Public utility tax rates | Urban 0.642%, motor 1.926% of gross income |
| Public utility tax exemption | Under $2,000 a month, $6,000 a quarter, or $24,000 a year, depending on your filing frequency |
| Business license | Required at $12,000 or more of gross income a year, among other triggers |
| Expenses | Not deductible from the gross-income taxes (no mileage, fuel, or fees) |
| Federal tips deduction | Not applicable at the state level; claim the federal deduction if you qualify |
B&O tax, public utility tax, and which one is yours
Most Washington businesses pay the business and occupation (B&O) tax, which the Department describes as a gross receipts tax: it is calculated on total income, and costs such as labor or materials cannot be deducted. A service business with less than $1 million of income in the prior year pays 1.5%.
Driving people for a fee sits in a different chapter of the tax code. The Department's page on motor and urban transportation says a business that does hauling for hire within Washington pays the public utility tax (PUT) instead of B&O tax, and it lists "operating taxicabs or ride share vehicles" as an example. Its brochure for independent taxicab drivers is just as direct: you pay PUT, you do not owe B&O tax, and you do not collect any of these taxes from customers. The brochure is written for taxis, but the same classification page covers ride share vehicles.
Delivery is less settled. The statute's definition of urban transportation includes "pickup, or delivery services," and the Department describes hauling for hire as transporting people or property owned by others for a fee. But we found no Department of Revenue page written for app-based meal or grocery delivery, so if you drive for DoorDash, Uber Eats, or Instacart, confirm your classification with the Department before you file.
Urban or motor: the five-mile rule
The lower urban rate applies when a trip starts and ends within the limits of the same city, within five miles of that city, or within five miles of two cities whose limits are no more than five miles apart. Distance is measured in a straight line. Every other trip that begins and ends in Washington is motor transportation at 1.926%. Trips that begin or end outside the state can be deducted.
The Department warns that urban hauls must be backed by detailed records, and that trips you cannot verify in an audit may be moved to the higher motor rate. For rideshare drivers, L&I's rules help here: from July 1, 2026, a transportation network company must give a driver, on request, a downloadable file of per-trip receipts for the previous 24 months, including pickup and drop-off locations. Download it each year and keep it with your mileage log.
The two thresholds: $12,000 and $24,000
The first number is about registration. The Department says you must register and get a business license if your gross income is $12,000 a year or more, or if your business must pay taxes to the Department.
The second is the PUT exemption in RCW 82.16.040. As WAC 458-20-104 explains, you owe no PUT for a reporting period in which your taxable amount is below $2,000 for a monthly filer, $6,000 for a quarterly filer, or $24,000 for an annual filer. The Department assigns your filing frequency. The exemption is a cliff, not an allowance: once you reach the threshold, tax is due on the full amount. A driver who grosses $23,000 on an annual account owes nothing; one who grosses $25,000 owes PUT on all $25,000.
Senate Bill 6346 also raises the B&O return filing threshold to $250,000 a year, but the Department's FAQ says that applies to taxpayers who are not required to collect or pay retail sales tax or public utility tax. A rideshare driver who owes PUT is outside that change.
Two Washington drivers
Both drivers are single, file annually, and, for illustration, report every trip under the urban classification. PUT is a state tax on gross income, which IRS Publication 334 says can be deducted on Schedule C, so the engine counts it as a business expense before computing federal tax. We apply PUT to the gross on the driver's 1099, including tips. That is the cautious reading: the Department has not published guidance for app-based drivers on tips, or on whether the base is the driver's pay or the rider's fare, so confirm with the Department before you file.
| Part-time | Full-time | |
|---|---|---|
| Gross income (incl. tips) | $20,000 | $58,000 |
| Public utility tax, urban | $0.00 | $372.36 |
| Net profit | $14,993.00 | $44,167.64 |
| Federal income tax | $0.00 | $1,762.94 |
| Self-employment tax | $2,118.44 | $6,240.69 |
| Total with PUT | $2,118.44 | $8,375.99 |
| Share of gross | 10.6% | 14.4% |
The part-time driver grosses $20,000: enough to need a business license, but under the $24,000 annual exemption, so no PUT is due. Federal tax is the whole bill. The full-time driver passes the threshold and owes $372.36 of PUT at the urban rate. If the same trips were all motor transportation, the PUT would be $1,117.08. Either way it is small next to self-employment tax of $6,240.69, and the full-time driver's quarterly federal estimate is $2,000.91. Our quarterly estimated tax calculator works out the safe-harbor amount from your own figures.
Washington's rideshare rules that touch your records
Washington's 2022 rideshare law (ESHB 2076) sets minimum pay for rideshare drivers, enforced by the Department of Labor and Industries. For trips starting in Seattle in 2026, the minimum is $0.70 per passenger minute plus $1.63 per passenger mile, or $6.12 per dispatched trip if greater. Outside Seattle it is $0.40 per minute plus $1.38 per mile, or $3.55. Tips are paid on top and do not count toward the minimum. None of this changes how the income is taxed, but the itemized receipts the law requires are useful when you reconcile a 1099 with your own totals.
Two benefits also apply to rideshare drivers but not to food or goods delivery. Companies must provide workers' compensation coverage during dispatch and passenger time. And under the Paid Leave pilot, rideshare drivers can opt in to paid family and medical leave, report their earnings each quarter, and have the premiums they pay reimbursed by the companies they drive for.
Cities and the federal side
Some cities run their own business licenses and B&O taxes. Tacoma, for example, says the 2022 state law does not preempt its business license and B&O requirements for rideshare companies and drivers, and it requires a Tacoma license from drivers who are based in the city or who pick up there and gross over $2,000 in Tacoma. Check the city where you live and the cities where you pick up.
Federally, nothing about Washington changes the rules. You file Schedule C and Schedule SE, pay four quarterly estimates, and can claim the tips deduction if your tips are reported on a 1099. The tips deduction guide covers the details.
General information for tax year 2026, not tax advice. We checked the sources below on October 11, 2026.
Frequently asked questions
Do I file a Washington income tax return for 2026?
No. The Department of Revenue says Washington does not currently have an individual income tax. Senate Bill 6346, passed in 2026, creates a 9.9% tax for individuals and joint filers with annual adjusted gross income exceeding $1 million, starting January 1, 2028, with first returns due in April 2029. At typical gig incomes it will not apply.
Do Uber and Lyft drivers owe B&O tax?
The Department of Revenue lists operating taxicabs or ride share vehicles as hauling for hire, which is taxed under the public utility tax instead of the business and occupation tax. The rate is 0.642% for urban trips and 1.926% for other trips that begin and end in Washington.
Does public utility tax apply to DoorDash or Instacart deliveries?
The statute defines urban transportation as including pickup and delivery services, and the Department describes hauling for hire as carrying people or property of others for a fee. The Department of Revenue has not published guidance written for app-based food or grocery delivery, so ask the Department, by phone or for a written ruling, which classification it applies to your deliveries.
Do I need a Washington business license?
The Department of Revenue says you must register and get a business license if, among other conditions, your gross income is $12,000 a year or more, or your business must pay taxes to the Department. Some cities also require their own license or endorsement.
Should I charge riders sales tax or add the tax to the fare?
No. The Department's brochure for independent taxicab drivers says a driver should not collect sales tax, B&O tax, or public utility tax from customers. The public utility tax is a cost of your business, which is why it can be deducted on Schedule C.
I live in Vancouver, Washington and drive into Portland. Which tax applies?
Washington public utility tax is generally due only on trips that begin and end in Washington, and the Department lists a deduction for hauls that begin or end outside the state. Oregon may tax income you earn there, so check the Oregon Department of Revenue for nonresident rules.
Does the federal tips deduction work in Washington?
Yes, at the federal level. Washington has no state income tax for the deduction to follow, so the full federal benefit is yours if you qualify. For the public utility tax, the Department has not said how tips are treated; our example counts them as gross receipts to be safe, and you can ask the Department to confirm.
Sources
- Washington Department of Revenue, Income tax and Frequently asked questions about income tax (SB 6346: 9.9% over $1 million from 2028; B&O filing threshold change)
- Department of Revenue, Motor and urban transportation (hauling for hire, ride share vehicles, rates, five-mile rule, records, deductions) and Public utility tax
- Department of Revenue, State tax reporting for taxi drivers and related businesses (independent drivers pay PUT, not B&O; do not collect tax from customers)
- Department of Revenue, Business & occupation tax and B&O tax classifications (gross receipts, service rate 1.5%); Apply for a business license ($12,000 registration test)
- Revised Code of Washington 82.16.010 (definitions) and 82.16.040 (exemption); WAC 458-20-104 ($2,000, $6,000, $24,000 thresholds)
- Washington L&I, TNC drivers: Getting paid (2026 minimum rates, receipts, 24-month data file) and Workers' compensation
- Washington State Legislature, ESHB 2076 bill summary (2022 rideshare driver law)
- Washington Paid Leave, Transportation Network Company (TNC) Pilot
- City of Tacoma, For-hire driver requirements (House Bill 2076 and Tacoma business license and B&O requirements for TNC drivers)
- IRS, Publication 334, Tax Guide for Small Business (state tax on gross income deductible on Schedule C); federal figures from our methodology page