Lyft Driver Taxes in Hawaii - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Hawaii?

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

Hawaii 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 any) to determine your total taxable income for Hawaii. Hawaii’s Department of Taxation will then apply the appropriate tax brackets to calculate your state income tax liability. You'll file a Hawaii state income tax return (Form N-11) to report this income.

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 purpose (Lyft trip). You can also deduct parking fees and tolls related to Lyft trips.
• 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 and is often more complex than using the standard mileage rate. You generally need to choose one method (standard mileage or actual expenses) and stick with it for the life of the vehicle.
• Ride-Sharing Apps Fees: Lyft charges fees for using their platform. These fees are deductible as a business expense. Keep records of all fees paid.
• Phone & Data: If you use your phone for Lyft-related activities (navigation, accepting rides, etc.), you can deduct the portion of your phone bill that corresponds to business use. Keep a log of how much time you spend using your phone for Lyft.

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). However, you only pay self-employment tax on your net earnings after subtracting business expenses from your gross income on Schedule C. You do get to deduct one-half of your self-employment tax from your gross income on Form 1040, which helps reduce your overall tax liability.

Closing Tip for Hawaii Residents

Navigating taxes as a self-employed individual can be complex, especially with Hawaii’s state income tax requirements. I strongly recommend keeping meticulous records of all income and expenses throughout the year. Consider using accounting software designed for freelancers or consulting with a qualified tax professional in Hawaii to ensure you're taking all eligible deductions and complying with all applicable tax laws. Don't wait until the last minute – proactive tax planning can save you time, money, and potential headaches.