Lyft Driver Taxes in Nebraska - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Nebraska?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Nebraska state levels. The IRS considers you self-employed, meaning you're essentially running your own small 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).

Nebraska has a graduated income tax system. This means the tax rate you pay increases as your taxable income increases. Your Lyft net profit, after federal adjustments, will be included in your Nebraska taxable income. You'll use Nebraska Form 1040N to calculate your state income tax liability based on the applicable tax brackets for the 2024 tax year (filing in 2025). Nebraska also allows for itemized deductions, which may further reduce your state tax liability, but most Lyft drivers will find the standard deduction more beneficial.

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 largest 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 claim. You cannot claim both mileage and actual expenses (like gas, oil, repairs) – you must choose the method that yields the larger deduction.
• Vehicle Expenses (Alternative to Mileage): If you choose to track actual expenses, you can deduct the business portion of costs like gas, oil changes, repairs, maintenance, insurance, vehicle registration fees, and depreciation. This requires meticulous record-keeping.
• Lyft-Related Software & Apps: Fees paid for ride-hailing apps, GPS navigation apps, and tax preparation software specifically used for your Lyft business are deductible.
• Phone Expenses: You can deduct the percentage of your cell phone bill that relates to your Lyft driving. If you use your phone solely for business, you can deduct the entire bill. Otherwise, you need to calculate the business use 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). However, you only pay this tax on profits exceeding $400. The good news is that you can deduct one-half of your self-employment tax from your gross income, which helps reduce your overall tax liability.

Closing Tip for Nebraska 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 designed for freelancers or consulting with a qualified tax professional (like myself!) to ensure you're taking all the deductions you're entitled to and complying with both federal and Nebraska tax laws. Proactive tax planning can save you significant money and stress when it's time to file your 2024 return in 2025. Good luck and safe driving!