Turo Host Taxes in Arizona - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Turo Host income taxable in Arizona?

Yes, income earned as a Turo host is absolutely taxable, both at the federal and Arizona 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.

Arizona Specific Rules: Arizona taxes income at a flat rate. As of 2024, the flat income tax rate is 2.5%. Your net profit from Schedule C will be added to your other income and taxed at this rate. Arizona also requires you to report your federal Schedule C income on Form 140, Arizona Individual Income Tax Return.

Top Tax Write-offs for Turo Hosts

Maximizing your deductions is key to minimizing your tax liability. Here are some common deductions for Turo hosts in Arizona:

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per business mile driven for Turo-related activities (picking up/dropping off vehicles, inspections, etc.). Keep a detailed mileage log!
• Vehicle Depreciation: You can deduct a portion of your vehicle’s cost each year based on the percentage of time it’s used for Turo. There are different depreciation methods (e.g., standard mileage method vs. actual expense method – see IRS Publication 463).
• Cleaning & Maintenance: Expenses for cleaning, oil changes, tire rotations, repairs, and other vehicle maintenance are deductible. Keep all receipts!
• Turo Fees & Software: The fees Turo charges you, as well as the cost of any software or apps you use to manage your Turo business (e.g., scheduling tools, expense trackers) are deductible.

The 15.3% Self-Employment Tax Surprise

Many Turo hosts are surprised to learn about self-employment tax. When you work for an employer, they pay half of your Social Security and Medicare taxes. As a self-employed individual, you’re responsible for both the employer and employee portions. This combined rate is 15.3% (12.4% for Social Security and 2.9% for Medicare).

You’ll calculate this tax on Schedule SE (Self-Employment Tax). However, you only pay self-employment tax on your net profit (after deducting business expenses) and only on earnings exceeding $400. The good news is you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040.

Closing Tip for Arizona Residents

Tax laws can be complex, and this information is for general guidance only. I strongly recommend keeping meticulous records of all your Turo income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. Finally, consulting with a qualified tax professional (like myself!) who understands Arizona tax law and the nuances of the sharing economy can help ensure you’re taking all the deductions you’re entitled to and staying compliant with both federal and state regulations. Good luck with your Turo business!