Lyft Driver Taxes in Kentucky - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Kentucky?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Kentucky state levels. As an independent contractor, you're considered self-employed by the IRS and the Kentucky Department of Revenue. This means you're responsible for reporting your earnings and paying all applicable taxes.

Federal Taxes: You'll report your Lyft income and expenses on Schedule C (Profit or Loss From Business), which is filed with your Form 1040. This form calculates your net profit (income minus expenses). It's crucial to keep accurate records of both your income from Lyft (provided on Form 1099-K if you meet the reporting thresholds) and all your business-related expenses.

Kentucky State Taxes: Kentucky has a flat income tax rate of 4.0% for 2024. You will report your net profit from Schedule C on your Kentucky individual income tax return (Form 740). Because Kentucky has a flat tax, your tax liability is a percentage of your taxable income, regardless of your income bracket. You'll also need to consider any applicable local taxes, though these are less common for self-employment income.

Top Tax Write-offs for Lyft Drivers

Maximizing your deductions is key to minimizing your tax bill. Here are some common write-offs for Lyft drivers in Kentucky:

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per business mile driven. Keep a detailed mileage log (date, starting/ending location, business purpose) to substantiate your claim. You can't use actual expenses (gas, oil, repairs) and the standard mileage rate – you must choose one.
• Vehicle Expenses (Alternative to Mileage): If you choose not to use 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 activities. Keep records of your usage to support this deduction. (e.g., percentage of time used for Lyft).

The 15.3% Self-Employment Tax Surprise

As an employee, your employer pays half of your Social Security and Medicare taxes. As a self-employed individual, you're responsible for both halves. This is known as self-employment tax. You'll calculate this on Schedule SE (Self-Employment Tax). The combined rate is 15.3% (12.4% for Social Security up to the annual wage base, and 2.9% for Medicare) on your net earnings from self-employment exceeding $400. Don't be alarmed when you see this amount – it's a normal part of being self-employed. 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 Kentucky Residents

Tax laws can be complex, and this information is for general guidance only. I strongly recommend keeping excellent records throughout the year – income statements from Lyft (Form 1099-K), mileage logs, and receipts for all expenses. Consider consulting with a qualified tax professional, like myself, to ensure you're taking all the deductions you're entitled to and complying with all federal and Kentucky tax regulations. Proper planning can save you significant money and stress during tax season!