Lyft Driver Taxes in New Mexico - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in New Mexico?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and New Mexico state levels. The IRS considers you self-employed, and New Mexico treats that income as part of your overall taxable income.

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). Even if you don't feel like you made a profit, you must file Schedule C if your gross income from Lyft exceeds $400.

New Mexico Requirements: New Mexico has a graduated income tax system, meaning the tax rate increases as your income increases. Your Lyft net profit (from Schedule C) will be added to your other income sources (like a W-2 job) to determine your total taxable income for New Mexico. New Mexico will then apply the appropriate tax bracket to calculate your state income tax liability. You'll use Form R-1100 to file your New Mexico income tax return. New Mexico also has various deductions and credits you may be eligible for, beyond the federal ones.

Top Tax Write-offs for Lyft Drivers

As a Lyft driver, you're entitled to deduct business expenses to reduce your taxable income. 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 use apps to track this.
• Vehicle Expenses (Alternative to Mileage): Instead of the standard mileage rate, you can deduct the actual expenses of operating your vehicle (gas, oil changes, repairs, insurance, registration, depreciation). This requires meticulous record-keeping and is often more beneficial if your actual expenses are high. You cannot switch between methods year to year.
• Lyft-Related Software & Apps: Fees paid for ride-hailing apps, GPS navigation, and tax preparation software specifically used for your Lyft business are deductible.
• Phone Expenses: If you use your personal phone for Lyft, you can deduct the percentage of the phone bill attributable to business use. Keep records of your business calls and data usage.

The 15.3% Self-Employment Tax Surprise

Because you're self-employed, you're responsible for 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). You only pay self-employment tax on profits over $400. The good news is you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which reduces your overall tax liability.

Closing Tip for New Mexico Residents

Navigating self-employment taxes can be complex. I strongly recommend keeping excellent records throughout the year – mileage logs, receipts for expenses, and income statements from Lyft. Consider using accounting software designed for freelancers or consulting with a qualified tax professional in New Mexico to ensure you're taking all eligible deductions and complying with both federal and state tax laws. Don't wait until tax season to get organized!