Lyft Driver Taxes in Montana - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Montana?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Montana state levels. The IRS considers you self-employed, meaning you're essentially running your own small business. Federally, you'll report your Lyft income and expenses on Schedule C (Profit or Loss From Business), which is then filed with your Form 1040. This schedule calculates your net profit (income minus expenses), which is then subject to income tax.

Montana also has a graduated income tax system. This means the tax rate you pay increases as your taxable income increases. Your Lyft net profit, as calculated on your federal Schedule C, will be included in your Montana taxable income (reported on Montana Form 17). Montana’s tax brackets change annually, so you’ll need to refer to the current year’s instructions when filing in 2025. You'll use the net profit from Schedule C to determine your Montana income tax liability based on those graduated rates.

Top Tax Write-offs for Lyft Drivers

As a self-employed Lyft driver, you can significantly reduce your tax burden 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 (date, starting/ending location, business purpose) to substantiate your mileage. 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 costs of operating your vehicle, such as gas, oil changes, repairs, insurance, registration fees, and depreciation. This requires meticulous record-keeping.
• Lyft-Related Software & Apps: Fees paid for ride-hailing apps, GPS navigation apps, or tax preparation software specifically used for your Lyft business are deductible.
• Phone Expenses: You can deduct the portion of your cell phone bill that is directly related to your Lyft driving. If you use your phone for both personal and business purposes, you can only deduct the business percentage.

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 – a combined 15.3% self-employment tax. This is calculated on Schedule SE (Self-Employment Tax). Don't be alarmed when you see this! The good news is you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which helps reduce your overall income tax liability. This tax applies to net earnings over $400.

Closing Tip for Montana Residents

Tax laws can be complex, and it's easy to miss deductions or make errors. I strongly recommend keeping excellent records of all your income and expenses throughout the year. Consider using accounting software designed for self-employed individuals. For personalized advice tailored to your specific situation, consulting with a qualified Montana tax professional is always a wise investment. Good luck, and drive safely!