Delivery and rideshare apps make it easy to start earning the same day. They also make it easy to misread the result, because the number on the screen is gross pay and the biggest cost, your vehicle, is spread across months of fuel, tires, insurance and lost resale value. This note shows how to count the full cost per mile, how the IRS standard mileage rate relates to that cost, and how to keep records you can rely on. It is planning information, not tax advice.
Why gross pay per hour misleads
A strong evening can look like good money per hour. But a delivery shift includes time and miles that the app does not pay for directly: driving to a busy area, waiting for orders, driving back toward home after the last drop. If you measure only the minutes when an order is active, you overstate what you earn.
The fix is to measure a complete session, from the moment you leave home to the moment you are back. Record:
- start and end odometer readings,
- total time, including waiting,
- gross payouts and tips,
- direct costs on the day, such as parking, tolls and fuel.
Do this for at least three sessions on different days before deciding anything. One unusually good shift is not a pattern.
The parts of vehicle cost
Vehicle costs fall into two groups.
Costs that rise with every mile: fuel or charging, tires, oil changes, brakes and other wear items, and repairs that become more likely with mileage.
Costs that exist whether you drive or not, but grow with business use: insurance (especially if business use requires a different policy), registration, financing interest and depreciation, the loss of value as the car ages and its odometer climbs.
Depreciation is the cost people most often forget. A car that drives many extra miles a year for gig work will usually be worth less when you sell it than the same car driven only for personal errands. That loss is real money, even though you do not pay it at the pump.
A simple way to estimate your own cost per mile
You do not need perfect numbers to make a useful estimate.
- Fuel per mile: divide the price you pay per gallon by your car's real-world miles per gallon. If you drive an EV, use your cost per kilowatt-hour divided by miles per kilowatt-hour.
- Maintenance and tires per mile: estimate what you expect to spend over a year on maintenance and tires, then divide by the miles you expect to drive in total.
- Extra insurance: if your insurer charges more for business use, divide the yearly increase by your expected business miles.
- Depreciation per mile: this is the hardest. A rough approach is to compare listed prices for your model at your current mileage and at a higher mileage, then divide the difference by the extra miles.
Add those four and you have an estimate of cost per mile. Multiply by the session's miles and subtract from gross pay, then divide by total hours. The real hourly rate workbench does that last step: enter the session's earnings, total costs and hours, and it shows net per hour.
Where the IRS standard mileage rate fits
The IRS publishes a standard mileage rate that self-employed people can use instead of tracking actual vehicle expenses, if they qualify. According to the IRS standard mileage rates page, the business rate for the 2026 tax year is 72.5 cents per mile for January 1 to June 30 and 76 cents per mile for July 1 to December 31, a midyear change. The rate for the 2025 tax year was 70 cents per mile.
Two cautions:
- This is a tax figure, not your cost. The IRS bases it on studies of typical vehicle operating costs. Your own cost per mile could be higher or lower. Use your own estimate to judge whether the work pays.
- Rules apply. There are conditions on when you can use the standard rate and on switching between the standard rate and actual expenses. Parking fees and tolls for business trips are generally handled separately. Read the IRS guidance for the year you file, because the rate and the rules can change.
Commuting is another trap. Ordinary commuting between home and a regular workplace is generally not deductible business mileage. How this applies to app-based driving depends on facts that a tax professional should look at if the amounts are large.
Insurance comes before the first order
Many personal auto policies limit or exclude coverage when you use the car to deliver goods or carry passengers for pay. Some platforms provide insurance during certain phases of a trip, often with gaps, such as while you are logged in but waiting. Before you drive:
- Ask your insurer directly whether business use is covered and in which phases.
- Read the platform's insurance summary, including deductibles and when coverage applies.
- Get answers in writing where you can.
An uninsured accident can erase a year of side earnings in a single afternoon. This is one place where the cautious answer is the right one.
A mileage log that holds up
The IRS expects records that support the expenses you claim. For mileage, a contemporaneous log is the strongest form: written at or near the time of the trip, not reconstructed months later. Each entry should include the date, starting point and destination or area, business purpose, and miles. App trip histories help, but they may not include miles driven between orders or to and from your work area, so keep your own log too. Phone apps, a spreadsheet or a notebook in the glovebox all work if you use them consistently.
Deciding whether to continue
After three to five complete sessions, compare net hourly pay with your minimum acceptable rate and with other options, including extra hours at a regular job. Consider the hidden costs as well: fatigue, safety, and time away from family. If the work clears your bar, keep tracking monthly, because fuel prices, platform pay and demand all change. If it does not, stopping is a perfectly good result. The test told you something useful without a long commitment.
Your working checklist
- Start a mileage log today, even before you decide whether driving work is worth continuing.
- Write down your vehicle's fuel economy, current insurance premium and expected maintenance.
- Call your insurer and ask, in writing if possible, how business use affects your coverage.
- Track three complete shifts from leaving home to returning home before judging the pay.
Should I use the standard mileage rate or actual expenses?
It depends on your vehicle, how much you drive for work and the rules for switching methods, which are explained in IRS guidance on car expenses. Many side drivers start with the standard rate because the records are simpler, but the choice in your first year can limit later options. Check the IRS rules or ask a tax professional before you file the first return that claims vehicle costs.