Lyft Driver Taxes in New York - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in New York?

Yes, absolutely. Income earned as a Lyft driver is taxable at both the federal and New York 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).

New York State also taxes this net profit. New York utilizes a graduated income tax system. This means the tax rate you pay increases as your income increases. Your Lyft income, added to all other sources of income, will fall into different tax brackets, each with its own rate. You'll report your Schedule C net profit on your New York State income tax return (Form IT-1040). New York also has its own set of deductions and credits that may further reduce your tax liability.

Top Tax Write-offs for Lyft Drivers

As a self-employed Lyft driver, you're eligible for several deductions that can significantly reduce your taxable income. 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 purpose (Lyft trip). You can also deduct parking fees and tolls related to 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 requires meticulous record-keeping and is often more complex than using the standard mileage rate. You generally need to choose one method (mileage or actual expenses) and stick with it.
• Phone & Data Expenses: If you use your phone for Lyft-related activities (navigation, accepting rides, communication with passengers), you can deduct the portion of your phone bill attributable to business use. Keep records showing how much of your phone usage is for Lyft.
• Ride-Sharing Apps & Software: Fees paid to Lyft, as well as the cost of any tax preparation software or apps specifically used for managing your Lyft income and expenses, 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 totals 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), which is filed along with your Form 1040. Don't be alarmed when you see this amount – it's the equivalent of what an employer would normally pay on your behalf. However, you do get to deduct one-half of your self-employment tax from your adjusted gross income, which can lower your overall tax bill.

Closing Tip for New York Residents

Navigating self-employment taxes can be complex, especially in a state like New York with its graduated income tax system. 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 advantage of all available deductions and complying with all applicable tax laws. Proactive tax planning can save you significant money and stress come tax season. Good luck, and safe driving!