Lyft Driver Taxes in Connecticut - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Connecticut?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Connecticut state levels. As an independent contractor, you are considered self-employed by both the IRS and the State of Connecticut. This means you’re responsible for reporting all earnings and paying the associated taxes.

Federal Requirements (Schedule C): You'll report your Lyft income and expenses on Schedule C (Profit or Loss From Business) of Form 1040. This form calculates your net profit (income minus expenses), which is then included in your Adjusted Gross Income (AGI). The IRS considers driving for Lyft a business, and you must report it as such.

Connecticut Specific Rules: Connecticut has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your net profit from your Lyft driving (as reported on Schedule C) will be added to your other income, and then taxed according to the Connecticut income tax brackets for the 2024 tax year (filing in 2025). Connecticut also requires you to file a state income tax return (Form CT-1040) to report this income. You'll likely need to make estimated tax payments quarterly to avoid penalties, as taxes aren't automatically withheld from your Lyft earnings.

Top Tax Write-offs for Lyft Drivers

As a Lyft driver, you can significantly reduce your tax liability by claiming eligible business expenses. Here are some key deductions:

• Mileage: This is often the largest 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 cannot use the standard mileage rate if you've previously claimed depreciation on your vehicle.
• 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 meticulous record-keeping.
• Lyft-Related Software & Apps: Expenses for apps or software used specifically for driving (e.g., tax tracking apps, route optimization tools) are deductible.
• Phone Expenses: You can deduct the portion of your cell phone bill that is directly related to your Lyft driving. This is typically calculated based on the percentage of time you use your phone for business purposes.

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 totals 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) of Form 1040. However, you only pay self-employment tax on your net earnings after subtracting your business expenses. There's also a deduction for one-half of your self-employment tax on Form 1040, which reduces your AGI.

Remember, self-employment tax applies to earnings over $400.

Closing Tip for Connecticut Residents

Navigating taxes as a Lyft driver can be complex. I strongly recommend keeping meticulous records of all income and expenses throughout the year. Consider using accounting software or a dedicated spreadsheet to track your mileage, receipts, and earnings. Don't hesitate to consult with a qualified tax professional in Connecticut – like myself – to ensure you're taking all eligible deductions and complying with all state and federal tax laws. Proactive tax planning can save you significant money and stress during tax season!