Lyft Driver Taxes in Maryland - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Maryland?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Maryland 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 added to your other income to determine your adjusted gross income (AGI).

Maryland’s income tax system is a bit more complex. Maryland has a graduated income tax rate, meaning the more you earn, the higher the percentage of tax you pay. Your federal AGI is the starting point for calculating your Maryland taxable income. In addition to the state income tax, Maryland also levies a local (county) income tax. The rate varies depending on the county you reside in. You'll use Form 502 to calculate your Maryland state income tax, and potentially a separate form for your county tax.

Top Tax Write-offs for Lyft Drivers

As a self-employed Lyft driver, you can significantly reduce your tax liability by claiming eligible business expenses. 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 also deduct parking fees and tolls related to your 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 method requires meticulous record-keeping and is often more beneficial if your actual expenses are high. You cannot use both methods in the same year.
• Lyft-Related Software & Apps: Expenses for apps or software used specifically for managing your Lyft driving (e.g., Stride Tax, Everlance, ride tracking apps) are deductible.
• Phone Expenses: If you use your personal phone for Lyft driving, you can deduct the percentage of the phone bill attributable to business use. Keep records of your usage to support this deduction.

The 15.3% Self-Employment Tax Surprise

When you're an employee, your employer pays half of your Social Security and Medicare taxes. As a self-employed individual, you're responsible for both the employer and employee portions, totaling 15.3%. This is known as self-employment tax. You'll calculate this on Schedule SE (Self-Employment Tax). The good news is that you can deduct one-half of your self-employment tax from your adjusted gross income, which can lower your overall tax bill. This tax applies to net earnings over $400.

Closing Tip for Maryland Residents

Navigating taxes as a Lyft driver can be complex, especially with Maryland’s graduated income tax and local taxes. I strongly recommend keeping meticulous records of all your income and expenses throughout the year. Consider using accounting software designed for gig workers to simplify tracking. Don't hesitate to consult with a qualified tax professional (like myself!) to ensure you're taking all eligible deductions and complying with all federal and Maryland tax laws. Proactive planning can save you significant time and money during tax season.