Turo Host Taxes in Alabama - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Turo Host income taxable in Alabama?

Yes, income earned as a Turo host is absolutely taxable, both at the federal and Alabama state levels. The IRS considers Turo hosting a business activity, meaning you’ll need to report your earnings and expenses.

Federal Requirements: You’ll report your Turo income and expenses on Schedule C (Profit or Loss From Business), which is filed with your Form 1040. This schedule allows you to deduct all ordinary and necessary business expenses, ultimately determining your net profit or loss.

Alabama Specific Rules: Alabama has a graduated income tax system. This means the tax rate you pay increases as your taxable income increases. Your net profit from Schedule C will be added to your other income (like wages from a W-2 job) to determine your total Alabama taxable income. You’ll then use the Alabama income tax brackets to calculate your state income tax liability. You'll file this using Form A-4, Alabama Income Tax Return.

Top Tax Write-offs for Turo Hosts

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per business mile driven (this is subject to official IRS confirmation, but is the current estimate). Keep a detailed log of all miles driven for Turo purposes – pickups, drop-offs, inspections, etc. You cannot deduct commuting miles.
• Vehicle Depreciation: Instead of mileage, you can choose to depreciate your vehicle. This allows you to deduct a portion of the vehicle's cost over several years. This is more complex than mileage, so consider consulting with a tax professional to determine the best method for your situation.
• Cleaning & Maintenance: Expenses related to cleaning, detailing, oil changes, tire rotations, and other vehicle maintenance are deductible. Keep all receipts!
• Turo Fees & Software: The fees Turo charges you, as well as any software or subscription costs you incur to manage your Turo business (e.g., vehicle tracking apps, accounting software) are deductible.

The 15.3% Self-Employment Tax Surprise

Because you're considered self-employed as a Turo host, you're responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This combined tax is called Self-Employment Tax and is currently 15.3% (12.4% for Social Security and 2.9% for Medicare) on earnings over $400.

You’ll calculate this on Schedule SE (Self-Employment Tax). The good news is that you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which can help lower your overall tax bill.

Closing Tip for Alabama Residents

Managing taxes as a Turo host can be complex. It’s highly recommended to keep meticulous records of all income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. As an Alabama resident, remember to factor in your state income tax obligations when estimating your tax liability. Don't hesitate to consult with a qualified tax professional in Alabama – like myself – to ensure you're taking all eligible deductions and complying with all applicable tax laws. We can help you navigate the nuances of self-employment tax and maximize your tax savings!