Taxes for a Grubhub driver come in two layers: regular federal income tax and a 15.3% self-employment tax, both calculated on your net profit after business expenses. Grubhub withholds nothing from your pay, so you’re expected to set money aside yourself and send it to the IRS four times a year through estimated quarterly payments. Everything then gets reconciled on an annual return built around Schedule C, Schedule SE, and Form 1040.
The classification is what drives all of this. Grubhub treats drivers as independent contractors, which means you cover both halves of Social Security and Medicare that a traditional employer would otherwise split with you.
What Grubhub Reports to the IRS
Starting with the 2026 tax year, Grubhub must issue you a Form 1099-NEC if it paid you $2,000 or more during the calendar year. That threshold rose from $600 under legislation that took effect for payments made after December 31, 2025.1Internal Revenue Service. Form 1099-NEC and Independent Contractors The figure on your 1099-NEC is gross pay before any expenses, so it will look higher than what you actually kept.
Here’s the trap: the $2,000 threshold decides whether Grubhub has to file paperwork, not whether your income is taxable. Every dollar you earn is reportable. Drive for more than one platform and each one applies the threshold on its own. You could earn $1,500 from Grubhub and $1,800 from DoorDash, receive no 1099 from either, and still owe tax on the full $3,300.
The Self-Employment Tax
Self-employment tax covers Social Security and Medicare. The combined rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare.2Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) You don’t apply that rate to your gross pay. It applies to 92.35% of your net earnings, which is what’s left after you deduct your business expenses.3Internal Revenue Service. Topic No. 554, Self-Employment Tax
The Social Security portion stops at $184,500 of net earnings in 2026.4Social Security Administration. Contribution and Benefit Base The Medicare portion has no cap. One partial offset: you deduct half of your self-employment tax when calculating your adjusted gross income. That doesn’t reduce the self-employment tax itself, but it lowers the figure your regular income tax is calculated against.5Internal Revenue Service. Schedule SE (Form 1040) – Self-Employment Tax
Then your regular federal income tax applies on top, at whatever bracket your total income lands in.
Paying Quarterly
Because nothing is withheld, the IRS expects you to pay as you earn. You’re required to make estimated payments if you expect to owe $1,000 or more in combined income and self-employment tax for the year.6Internal Revenue Service. 7Internal Revenue Service. When to Pay Estimated Tax
- April 15, covering January through March
- June 15, covering April and May
- September 15, covering June through August
- January 15 of the following year, covering September through December
The periods aren’t equal. If a due date lands on a weekend or holiday, it shifts to the next business day.
Safe Harbor
You avoid an underpayment penalty if you pay at least the lesser of 90% of your current year’s total tax or 100% of your prior year’s total tax.8Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty If your adjusted gross income exceeded $150,000 last year ($75,000 if married filing separately), the prior-year figure is 110%.9Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax
The simplest approach for most drivers is to take last year’s total tax, divide by four, and pay that each quarter. If your income climbs during the year, you’re still protected. If it drops, you can lower the payments, but recalculate carefully to stay within the 90% current-year threshold.
Skipping Quarterly Payments
If you skip estimated payments and settle up in April instead, the IRS applies an underpayment penalty based on its current interest rate, calculated against each missed or short payment for the time it was late.9Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax It isn’t crushing on a single quarter, but it compounds across all four and the interest rate adjusts quarterly.
Most states with an income tax run a similar quarterly system. Rates range from zero in no-income-tax states to above 13% in the highest, so your combined bill depends heavily on where you live.
Deductions That Cut Your Bill
You’re taxed on net profit, not gross pay. Every legitimate business expense you track reduces both your income tax and your self-employment tax, so this is where good records pay off the most.
Vehicle Expenses
Driving is almost always the biggest deduction. You pick one of two methods.10Internal Revenue Service. Topic No. 510, Business Use of Car
The standard mileage rate for 2026 is 72.5 cents per business mile.11Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile It covers gas, depreciation, insurance, maintenance, and repairs in a single number. A driver logging 20,000 business miles deducts $14,500 without saving a fuel receipt. You still need a mileage log showing the date, destination, business purpose, and miles for each trip; apps like Everlance or Stride can run that in the background.
The actual expense method means tracking every vehicle cost (fuel, oil, tires, repairs, insurance, registration, depreciation) and multiplying the total by the share of your miles that was for business. If 70% of your driving is delivery work, 70% of your vehicle costs are deductible. For some drivers with expensive vehicles the actual method yields more, but the paperwork is far heavier.
A rule that catches drivers off guard: if you lease and pick the standard mileage rate in year one, you’re locked into it for the whole lease, including renewals.12Internal Revenue Service. Income and Expenses 5 For vehicles you own, choosing actual expenses in year one locks out the standard mileage rate for that vehicle later.
Phone and Data
Your phone is a working tool, and the business-use percentage of your bill and data plan is deductible. If you use the phone roughly 60% for delivery work, deduct 60%. Keep the estimate realistic because an inflated split invites scrutiny.
Supplies, Tolls, and Fees
Insulated bags, phone mounts, car chargers, and similar gear bought for delivery work are fully deductible. Tolls and parking fees incurred on deliveries are 100% deductible regardless of which vehicle method you use. Tax preparation fees for your business return and fees on a bank account dedicated to delivery income also qualify.
Home Office
If you use a dedicated area of your home regularly and exclusively to manage your delivery business (tracking expenses, handling platform messages, organizing records), you may qualify for the home office deduction. The simplified method gives you $5 per square foot up to 300 square feet, capping at $1,500.13Internal Revenue Service. Simplified Option for Home Office Deduction The space can’t double as a guest bedroom or a playroom. Regular and exclusive means what it sounds like.
The Qualified Business Income Deduction
On top of your expenses, you may qualify for the qualified business income (QBI) deduction under Section 199A, which lets you deduct up to 20% of your net business income from your taxable income.14Internal Revenue Service. Qualified Business Income Deduction The deduction was made permanent by the One Big Beautiful Bill Act after originally being set to expire after 2025.
If your Schedule C shows a $30,000 net profit, the QBI deduction could shelter $6,000 from income tax. It doesn’t reduce your self-employment tax, only income tax. Sole proprietors, which is what Grubhub drivers are for tax purposes, are among the eligible business types.14Internal Revenue Service. Qualified Business Income Deduction For most drivers the deduction is simply 20% of net delivery profit, limited to 20% of taxable income minus net capital gains. You claim it on Form 1040 whether you itemize or take the standard deduction.
Health Insurance and Retirement
Two more deductions reduce the bill and are easy to miss.
Self-Employed Health Insurance
If you pay for your own health insurance and aren’t eligible for coverage through a spouse’s employer plan, you can deduct 100% of your medical, dental, and vision premiums. That covers you, your spouse, dependents, and any child under 27 even if they aren’t your dependent. The deduction is claimed on Schedule 1 using Form 7206 and reduces your adjusted gross income directly.15Internal Revenue Service. Instructions for Form 7206 It can’t exceed your net self-employment income for the year.
Retirement Contributions
Self-employed retirement accounts cut your current tax bill while building long-term savings. Two common options:
- A SEP IRA lets you contribute the lesser of 25% of your net self-employment earnings or $72,000 for 2026. Setup is easy, there’s no annual filing, and contributions are deductible.16Internal Revenue Service. SEP Contribution Limits (Including Grandfathered SARSEPs)
- A solo 401(k) allows an employee deferral of up to $24,500 for 2026 plus employer profit-sharing contributions, with a total cap of $72,000.17Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026
Most drivers earning typical gig income will find the SEP IRA simpler. The solo 401(k) matters more if you want to shelter a bigger share of a smaller profit, since the employee deferral isn’t tied to a percentage of earnings.
Filing the Return
Three forms do the work: Schedule C, Schedule SE, and Form 1040.
Schedule C reports your gross delivery income and subtracts your business deductions to get net profit.18Internal Revenue Service. Schedule C (Form 1040) – Profit or Loss From Business Start with the totals from your 1099-NEC forms plus any income not on a 1099, then list vehicle expenses, phone, supplies, and the rest.
Schedule SE takes that net profit, multiplies it by 92.35%, and applies the 15.3% self-employment tax rate. It also computes the deduction for half of your self-employment tax, which carries back to Schedule 1 of your Form 1040.5Internal Revenue Service. Schedule SE (Form 1040) – Self-Employment Tax
Form 1040 combines your Schedule C profit with any other income you have, adds the self-employment tax as a separate liability, and credits any estimated payments you made during the year.19Internal Revenue Service. About Form 1040-ES Overpayments come back as a refund; any balance is due at filing.
The deadline to file your 2026 return (or request an extension) is April 15, 2027. An extension pushes the paperwork to October 15, 2027, but does not extend the time to pay. Any tax owed is still due April 15.
Keeping Records
The IRS generally requires you to keep records supporting items on your return for at least three years from the date you filed or the due date, whichever is later.20Internal Revenue Service. How Long Should I Keep Records Underreport income by more than 25% of what you showed and the window extends to six years. Never file at all and there’s no statute of limitations, so hold on to records indefinitely.
The records that matter most for a driver are your mileage log, expense receipts, 1099 forms, bank statements from any account used for business income, and copies of filed returns. Digital records are fine as long as they’re legible and backed up. A mileage app that exports reports is cheap audit insurance. If the IRS questions your vehicle deduction and you can’t produce a log, the whole deduction can be disallowed, and losing a $14,500 deduction over a missing log is a painful way to learn the rule.