Lyft Driver Taxes in Mississippi - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Mississippi?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Mississippi state levels. As an independent contractor, you're considered self-employed by the IRS and the state of Mississippi. This means you'll need to report your earnings and pay taxes accordingly.

Federal Requirements: 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). Lyft will send you a Form 1099-K detailing your earnings for the year, but it's your responsibility to accurately track all income and expenses, even if the 1099-K doesn't reflect everything.

Mississippi Specific Rules: Mississippi has a flat income tax rate of 5% for the 2024 tax year (filing in 2025). Your net profit from Schedule C will be added to your other income, and this total taxable income will be subject to the 5% state income tax. Mississippi also requires you to file a state income tax return (Form 82-102) to report your income and calculate your state tax liability.

Top Tax Write-offs for Lyft Drivers

As a Lyft driver, you're eligible for several tax deductions that can significantly reduce your tax bill. Here are some key ones:

• 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 meticulous record-keeping and is often more complex than using the standard mileage rate. Choose the method that yields the larger deduction.
• Phone Expenses: If you use your phone for Lyft-related activities (navigation, accepting rides, communicating with passengers), you can deduct the portion of your phone bill attributable to business use.
• Lyft-Specific Software & Fees: Any fees paid to Lyft, or costs for apps/software used specifically for driving (e.g., tax tracking apps) are deductible.

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).

The good news is you get to deduct one-half of your self-employment tax from your adjusted gross income on Form 1040. However, it's important to be prepared for this additional tax liability, as it's often a surprise to new self-employed individuals. Remember, self-employment tax applies to earnings over $400.

Closing Tip for Mississippi Residents

Navigating self-employment taxes can be complex. I strongly recommend keeping meticulous records of all your income and expenses throughout the year. Consider using accounting software or a dedicated app designed for gig workers. Don't hesitate to consult with a qualified tax professional, like myself, to ensure you're taking all eligible deductions and complying with both federal and Mississippi tax laws. Proper planning can save you significant money and stress during tax season!