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Taxis may be yellow because it is an uncommon color for personal vehicles, so it it is easier to both see a taxi and to determine that it is a taxi.

Historically

There are many Yellow Cabs taxicab operators around the world (some with common heritage, some without). The original Yellow Cab Company, based in Chicago, Illinois is one of the largest taxicab companies in the United States.

In 1907, car salesman John Hertz looked at his surplus of traded-in cars and decided to start a taxicab business. Since taxis need to stand out in a sea of cars, Hertz reportedly commissioned a study to determine which color was easiest to spot at a distance. The answer was yellow.

His Chicago Yellow Cab Company was the first taxicab service to use that now-familiar moniker. However, these days not all Yellow Cabs are yellow and not all yellow cabs are part of the Yellow Cab company.

In 1923, Hertz expanded his automobile empire by purchasing a car-rental business from Walter L. Jacobs. Although this particular company was acquired by General Motors a few years later, it was only the beginning for Hertz's rental cars and his affinity for yellow. When the entrepreneur established the Hertz Corporation in 1953, he used yellow in the new logo.
Not all taxis are yellow. It depends on where you are.

But it does identify them for few ordinary cars are yellow.

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