The action in "Taxi Driver" revolves around Travis Bickle, a Vietnam War veteran who works as a taxi driver in New York City to deal with his insomnia. He is a lonely, frustrated man who frequents porn theaters, drinks during the daytime, and barely has anyone to talk to. He drives customers around during the night, so he is exposed to the seedy nightlife of 1970s New York City. He grows increasingly frustrated with the urban decay and corruption in the city and dreams of eradicating "the scum off the streets." We get a better idea of Bickle's mindset from the diary entries he writes. He is keen on improving himself and keeps searching for someone to connect with.
One day, Bickle spots a beautiful woman, Betsy, who works in a campaign office for a presidential candidate named Senator Charles Palantine. Bickle soon grows infatuated with her and convinces Betsy to go on a date with him. Later, when Palantine takes a cab ride with Bickle, the taxi driver airs his views on the scum of New York City. Bickle also encounters a young prostitute named Iris and her pimp, Sport, in his taxi. After Sport roughly manhandles Iris out of the car and pays the cabbie 20 dollars, Bickle is unable to forget the incident.
Betsy is initially charmed by Bickle on their first date, but she gets irked by his decision to take her to a pornographic theater for their second date. She spurns his advances after that, so Bickle gets enraged and verbally harasses Betsy in her office before he is thrown out. The taxi driver then picks up a brooding customer who confesses that he is planning to shoot his wife for cheating on him. This conversation seems to spark something in Bickle, and he experiences an existential crisis. He attempts to open up to his colleague, Wizard, about his bad thoughts, but Wizard tells him not to worry so much. Bickle's mental health continues to worsen. After randomly spotting Iris again while driving his car, the troubled cabbie starts to see himself as a vigilante of sorts. He opts for an intense workout regime and toughens up his body. He buys guns and practices scenarios where he shoots people. He views Senator Palantine as one of the city's problems, so he starts attending his campaigns to inspect his security arrangements.
One night, Bickle shoots and kills a thief who is brandishing a gun at a convenience store. The incident has no negative consequences for Bickle, and he gets increasingly bolder. He seeks out the young prostitute, Iris, and urges her to leave her exploitative line of work. After a couple of meetings, she is convinced enough to follow her dreams of moving to Vermont. Iris goes to Sport and attempts to leave him, but he convinces her to stay.
The next day, Bickle leaves 500 dollars for Iris, along with a note stating that he won't be alive for much longer. He then shaves his hair into a mohawk and attempts to shoot Palantine at a rally. However, he flees after his suspicious actions alert the Secret Service agents. That evening, he drives over to Iris's brothel and shoots Sport and two more men, including a mafia boss. Bickle is wounded after the lengthy gunfight, and he attempts to shoot himself. However, he is out of bullets, so he mimes shooting himself as the police arrive.
In the final dream-like sequence of the film, we fast-forward several months later. We see old newspaper clippings lauding Travis as a hero and a handwritten letter thanking him for saving Iris. We see him once again in his taxi, with Betsy smiling in the backseat. After dropping her off, Bickle drives off, seemingly content. However, right before the film ends, his body language shifts again after he gets distracted and triggered by something he sees in his rearview mirror.