The Hidden Costs of Gig Work: Gas, Maintenance, and Taxes

The Illusion of the $25/Hour Myth

When you finish a 4-hour shift and the app tells you that you made $100, you feel great. You made $25 an hour! Or did you? The reality of 1099 independent contractor work is that the gross revenue displayed on your screen is radically different from your actual net profit. Here is why.

1. Fuel Consumption

Depending on whether you drive a Prius or a V6 Sedan, fuel is your most immediate and painful expense. If you drove 60 miles during that $100 shift in a car getting 20 MPG, and gas is $3.50, you just spent $10.50. You actually made $89.50.

2. The Silent Killer: Depreciation & Maintenance

Every mile you drive pushes your car closer to fresh tires, an oil change, new brake pads, and eventual total depreciation. The IRS calculates this rate at around 67 cents a mile, but a safe real-world rule of thumb for gig drivers is estimating 15-20 cents of depreciation and maintenance cost for every mile driven. For our 60 mile shift example, that's another $12 wiped from your earnings.

3. Taxes (You Are Your Own Employer)

When you have a W2 job, your employer pays half of your FICA taxes (Social Security and Medicare) and deducts your income tax automatically. As a 1099 contractor, you owe the full self-employment tax (15.3%) PLUS your normal income bracket rate. You must track your miles to write them off as a deduction to lower this massive tax burden.

Conclusion: Track Everything

To survive in the gig economy, you must treat your vehicle like a business. If you don't track your miles and separate your expenses, you will owe thousands in April. Start using tools like Dasher OS to automatically deduct these costs from your dashboard in real-time, so you always know your true net profit.