Taxes for NYC Yellow and Green Taxi Drivers

In short: if you lease a yellow or green cab, or drive your own medallion, you are usually running a small business for tax purposes. You report all fares and tips — card and cash — as income, subtract your business costs (the lease, gas if you pay it, the fleet's card-processing charge, tolls you weren't paid back), and pay income tax plus self-employment tax on the profit. When New York State checks a taxi driver, it asks first for the Verifone or CMT metered statement for the year (NYS checklist).

Taxi taxes differ from app taxes in three ways: much of your income can be cash, you may get no 1099 for it, and if you lease, your main cost is a lease governed by TLC rules. This page covers those parts. For app driving, see taxes for Uber and Lyft drivers. This is general information, not tax advice.

Your income records

Card money vs what you keep. Card fares and tips go to the owner or its agent first. TLC rule 58-21(f) says the owner must pay you all non-cash payments made during your shift, less the Taxicab Improvement Surcharge, at no cost to you — daily for shift leases, and weekly if you lease weekly and choose that. The owner may also keep the MTA tax on your trips (if the owner is the taxpayer) and amounts the rule allows the technology provider, but must not withhold "credit card pass-along, fees or charges" from these payments (TLC Rules, ch. 58). Passenger charges such as the Improvement Surcharge, MTA State Surcharge and congestion charges are collected for others; they are not your fare income. Keep the fleet's statements so you can show which amounts were passed through.

Cash tips matter. TLC's own trip records only include credit-card tips; cash tips are not recorded. In TLC Help's aggregation of Sep 2025–Aug 2026, about 91% of yellow and green card trips had a tip — but that says nothing about cash trips. Your log is the only record of cash tips, and you need it for the no tax on tips deduction too.

Do taxi drivers get a 1099 at all? It depends on how you are paid — see do taxi drivers get a 1099?. Either way, the IRS says all business income must be reported, with or without a form.

Your biggest costs: the lease and what comes with it

TLC caps what an owner can charge for a taxi lease and lists the only extra charges allowed (rule 58-21(c)). Among those extras is a credit card processing surcharge of up to $7 per shift or $49 per week (TLC Rules, ch. 58). For your taxes, what matters is what you actually paid. NYS asks for:

• any lease agreement in effect for the year, and
• a driver pay report, including a statement of what the leasing agent took out of your credit transactions.

(NYS checklist)

For the complete list of deductible and non-deductible items, see the TLC driver deductions list.

Mileage rate or actual costs?

IRS Publication 463 says you can use the standard mileage rate for "a car for hire (such as a taxi)" unless an exclusion applies — for example, five or more cars used at the same time (Pub 463). The 2026 rate is 72.5¢ a mile Jan–Jun and 76¢ from July 1 (as of 2026-10-12, IRS).

But with the standard rate you can't also deduct lease payments, gas, repairs, insurance or registration for that car in the same year. For a lease driver whose main cost is the lease, that trade-off needs real numbers. And Pub 463's rule for leased cars — choose the standard rate and you keep it for the whole lease — may affect a driver who leases the same cab long-term. Work through standard mileage vs actual expenses with a preparer.

What you can't deduct

NYS lists as not deductible: tickets or summonses, commuting, clothing or laundry (unless a mandated uniform), and meals not tied to business travel outside your metro area (35 miles) (NYS checklist). That includes TLC summonses — see can I deduct TLC fines?

The taxes you pay on the profit

• Self-employment tax: 15.3% (12.4% Social Security + 2.9% Medicare) if net earnings are $400 or more (IRS). Details: self-employment tax for TLC drivers.
• Estimated tax: dates and safe harbors in quarterly estimated taxes.
• MCTMT: for self-employed net earnings in NYC above $50,000 (2025) or $150,000 (2026 on) (NYS). See MCTMT.
• NYC UBT: a return is required only if gross business income is over $95,000; TLC-licensed taxi businesses use NAICS code 485310 (NYC-202S instructions). See NYC UBT.

Easy-to-miss items for taxi drivers

• Reporting only card money. The meter statement and fleet payouts show card trips clearly; cash fares and cash tips are income too.
• Counting passenger surcharges as fare income or as your cost. The Improvement Surcharge, MTA State Surcharge and congestion charges pass through you to others. Keep the fleet statement that shows them.
• Deducting a toll the passenger paid. Under the TLC fare rules, passengers pay most tolls on top of the meter. Only tolls you paid and weren't paid back are your cost.
• Mixing mileage and lease. Using the mileage rate and also deducting the lease for the same car in the same year is not allowed.
• Losing the lease receipts. TLC rule 58-21(g) requires the owner or agent to give you a written receipt for every payment or deduction under the lease; keep them in one folder for the year.

If you also drive for an app

A TLC driver license lets you drive in more than one sector. App income has its own forms — the 1099-K, the app tax summary and TLC's required itemization of deductions from 1099-K gross. Report both kinds of driving; if they are one driving business, a preparer can show how to combine them on Schedule C. See your 1099-K vs what you earned.

Medallion owners: the Commercial Motor Vehicle Tax

NYC Finance says the annual Commercial Motor Vehicle Tax for medallion taxicabs was reduced from $1,000 to $400. The tax year runs June 1 to May 31, and the full $400 is due by June 20, with no more semi-annual periods (NYC Finance). (The same page's FAQ still mentions June 1 and December 1 dates; the June 20 date is in its main notice.) TLC rule 58 makes payment a condition of issuing or renewing the license (TLC Rules, ch. 58).

Year-end routine and what to save: TLC driver tax records. Card and cash rules on the job: taxi payment rules.