There's a number gig platforms show you and a number you actually keep. Most people never do the math between those two figures, which is why so many gig workers feel like they're grinding hard but never getting ahead.
Let's use a DoorDash driver as a concrete example. It's a common starting point for side income because the app shows you earnings per hour and makes the math feel simple. It isn't.
Starting Point: $25/hr Gross
Say you're averaging $25 per hour on DoorDash according to the in-app earnings tracker. That's your gross pay — total platform revenue before a single expense comes out. Here's what actually needs to come off that number.
Platform Fees: About 15%
DoorDash and most gig platforms don't pay you the full customer fare. They take a commission — typically 15-25% of what the customer pays, depending on the market, order type, and any promotions running. On a $25 gross hour, assume roughly $3.75 goes back to the platform in the form of reduced pay relative to total transaction value. You're now at about $21.25.
This isn't a line-item deduction you see on a statement — it's already baked into the earnings number DoorDash shows you. The point is that the app earnings don't reflect the full economic value being generated, just your cut after platform fees.
Gas: $50/Week, or About $1.25/hr
Fuel cost varies enormously by vehicle and city, but $50/week is a reasonable average for someone doing 15-20 hours of active delivery driving in a mid-size sedan. At 20 active hours per week, that's $2.50/hr off the top. At 40 hours, it drops to $1.25/hr. We'll use $1.25 for someone doing this as a meaningful side gig (40 hours/week). Running total: ~$20.
Vehicle Wear and Maintenance: $30/Week
This is the one that kills people, because it's invisible until it isn't. Every mile you drive for deliveries accelerates your vehicle's depreciation, tire wear, brake wear, and oil consumption. The IRS pegs the standard mileage rate at 67 cents per mile (2024) to account for all of this. A delivery driver doing 200 miles per week for the gig has $134/week in vehicle costs by that measure — but even using a more conservative estimate of $30/week strips another $0.75/hr off your earnings. Running total: ~$19.25.
Canada note: The CRA allows deduction of actual vehicle expenses (fuel, insurance, maintenance, depreciation) proportional to business use, or a simplified flat rate. The math is similar — vehicle cost is real whether you track it or not.
Phone and Data: $20/Week
You need a working phone with a reliable data plan to run any gig app. If you're using it roughly half the time for gig work, allocating $20/week to the hustle is conservative. That's another $0.50/hr. Running total: ~$18.75.
Self-Employment Tax: 15.3%
Here's where the number really drops. As a gig worker, the IRS treats you as self-employed. That means you owe self-employment tax (SE tax) — the self-employed person's version of Social Security and Medicare — on top of regular income tax. The rate is 15.3% on your net profit.
W-2 employees pay half that rate (7.65%) because their employer covers the other half. You're your own employer. You cover both halves.
On $18.75 net profit per hour (after expenses), 15.3% SE tax is about $2.87/hr. Running total: ~$15.88. Then income tax on top of that — at even a modest 12% federal rate, add another $1.90. You're now somewhere around $13-14/hr actually in your pocket.
| Item | Per Hour | Running Total |
|---|---|---|
| Gross earnings | — | $25.00 |
| Platform fee impact (~15%) | -$3.75 | $21.25 |
| Gas ($50/wk, 40 hrs) | -$1.25 | $20.00 |
| Vehicle wear ($30/wk, 40 hrs) | -$0.75 | $19.25 |
| Phone allocation ($20/wk, 40 hrs) | -$0.50 | $18.75 |
| Self-employment tax (15.3%) | -$2.87 | $15.88 |
| Federal income tax (~12%) | -$1.90 | ~$13.98 |
That's the ballpark. Not $25. Not $20. More like $13-14, and that's before state income taxes or any Canadian provincial taxes, which would push it lower.
Why Most People Don't See This Coming
The problem isn't that gig work is secretly bad — it's that the math is invisible until you sit down and do it. Gig apps show you gross earnings. Gas and maintenance hit you in separate purchases throughout the month. Tax shows up as a lump sum in April. Nobody puts all four buckets on one screen and says "here's what you're actually netting."
The result is gig workers who feel like they're making good money, spend the full paycheck, and then get blindsided by a tax bill in spring that drains whatever cushion they had.
The deduction upside: The flip side of paying self-employment tax is that your legitimate business expenses — gas, vehicle mileage, phone, any insulated delivery bags, etc. — are all deductible from your gross income before SE tax is calculated. Tracking those expenses consistently can meaningfully reduce your actual tax bill.
Run the numbers on your own side hustle
The Side Hustle True Cost Calculator lets you plug in your platform income, business expenses, and tax situation to see your real hourly rate — and how it compares to a day job. No spreadsheet required.
Calculate your true hourly rate →What This Means Practically
Knowing your real hourly rate changes how you think about the gig. A few things worth considering:
Your vehicle is a business asset being consumed. Every delivery mile isn't free. If you're driving a 2019 Civic that you plan to own for another 5 years, gig work is accelerating that car's useful life. That has a real dollar value, even if it doesn't show up in your bank account this week.
Time spent waiting counts. The app may calculate earnings per active delivery, but your time sitting in parking lots, driving to hot zones, and declining low-value orders all comes out of the same hour. If you're earning $25/hr only during active deliveries but spending 30% of your time unproductive, your effective rate drops further.
Your effective rate depends heavily on your market. Drivers in dense urban areas with short delivery distances and high order volume will net more than drivers in suburban areas putting 8 miles on the car per delivery. The math above uses averages — your actual numbers could be better or worse.
Expenses are deductible, which softens the tax hit. If you track every business mile and business expense, you can reduce your taxable net income significantly. The IRS mileage rate of 67 cents/mile is designed to cover real vehicle costs. A driver doing 200 miles/week for the gig can write off $134/week — $6,968 over a full year. That's real money off your taxable income.
The Right Way to Evaluate a Side Hustle
Before committing serious time to any gig, run this calculation:
- Estimate your monthly gross platform earnings
- Subtract all direct costs: fuel, vehicle wear, equipment, supplies, phone allocation
- Multiply the resulting net by 0.847 to account for SE tax (15.3%)
- Multiply again by your marginal income tax factor (usually 0.88 to 0.78 depending on your bracket)
- Divide by your total time spent (active hours plus waiting, not just paid time)
That final number is your real hourly rate. Compare it honestly to what else you could do with that time — a part-time job, a skill you're building, or rest that helps your primary income.
The goal isn't to talk you out of gig work. It's to make sure you're making a real decision, not a math mistake.
Frequently Asked Questions
How much does a DoorDash driver actually make per hour after expenses?
A driver grossing $25/hr typically nets $12-14/hr after platform fees, gas, vehicle wear, phone costs, self-employment tax, and income tax. The exact number depends on fuel efficiency, how urban your market is, and your total tax bracket. High-density markets with short delivery distances will land higher; suburban markets with long drives per order will land lower.
What expenses can delivery drivers deduct from their taxes?
You can deduct business-use vehicle expenses (either actual costs or the IRS standard mileage rate of 67 cents/mile in 2024), the business-use portion of your phone plan, insulated delivery bags, and any equipment required for the gig. Tracking mileage is usually the biggest single deduction available to delivery drivers.
Why do gig workers pay more tax than regular employees?
W-2 employees pay 7.65% for Social Security and Medicare (FICA), and their employer covers the other 7.65%. Gig workers are classified as self-employed, so they pay both halves — 15.3% total. That's before income tax. The combined effective tax rate on gig income often runs 30-40% once federal income, state income, and SE tax are all included.
Does the DoorDash earnings tracker show your true hourly rate?
No. The in-app earnings tracker shows gross revenue before business expenses and taxes. It doesn't account for fuel, vehicle depreciation, phone costs, or any taxes owed. It's useful for comparing busy vs. slow shifts, but it's not a reliable measure of what you're actually netting per hour worked.