Lyft Driver Taxes in Arkansas - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Arkansas?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Arkansas state levels. The IRS considers you self-employed, meaning you're essentially running your own small business. Federally, you'll report your Lyft income and expenses on Schedule C (Profit or Loss From Business), which is then filed with your Form 1040. This schedule calculates your net profit (income minus expenses).

Arkansas 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 traditional job, if applicable) to determine your total taxable income for Arkansas. Arkansas then applies its tax brackets to that total income to calculate your state income tax liability. You'll use Form AR1000 to file your Arkansas state income tax return.

Top Tax Write-offs for Lyft Drivers

As a Lyft driver, you're entitled to deduct business expenses to reduce your taxable income. Here are some key deductions:

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per business mile driven. Keep a detailed log of all miles driven for Lyft, including the date, starting and ending locations, and business purpose. You can use apps like Stride or Everlance to help with this.
• Vehicle Expenses (Alternative to Mileage): Instead of the standard mileage rate, you can deduct the actual expenses of operating your vehicle, such as gas, oil changes, repairs, insurance, registration fees, and depreciation. This requires more detailed record-keeping, and you generally need to choose one method (mileage or actual expenses) and stick with it.
• Lyft-Related Software & Apps: Fees paid for ride-hailing apps, GPS navigation, and tax preparation software specifically used for your Lyft business are deductible.
• Phone Expenses: If you use your personal phone for Lyft driving (which is common), you can deduct the percentage of the phone bill that relates to business use. Keep records of your business calls and data usage.

The 15.3% Self-Employment Tax Surprise

Because you're self-employed, 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 up to the annual wage base, and 2.9% for Medicare). You'll calculate this on Schedule SE (Self-Employment Tax). Don't be alarmed when you see this amount – it's equivalent to what you'd pay if you were an employee, but you're now responsible for both sides. 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 Arkansas Residents

Tax time can be complex, especially when you're self-employed. I strongly recommend keeping meticulous records of all your income and expenses throughout the year. Consider using accounting software or a dedicated app to simplify the process. If you're unsure about any aspect of your tax filing, consulting with a qualified tax professional in Arkansas is always a wise investment. They can help you maximize your deductions and ensure you're compliant with both federal and state tax laws. Good luck, and safe driving!