Lyft Driver Taxes in North Carolina - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in North Carolina?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and North Carolina state levels. The IRS considers you self-employed, not an employee of Lyft. This means you're responsible for reporting your earnings and paying all applicable taxes.

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.

North Carolina Specific Rules: North Carolina has a flat income tax rate of 4.5% for the 2024 tax year (filing in 2025). Your net profit from Schedule C will be included in your adjusted gross income (AGI) on your North Carolina state income tax return (Form D-400). The flat tax rate simplifies things – you apply 4.5% to your taxable income after deductions and adjustments.

Top Tax Write-offs for Lyft Drivers

As a self-employed Lyft driver, you can significantly reduce your tax liability 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. You can use apps like Stride or Everlance to track this automatically.
• 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 less beneficial than the standard mileage rate unless your actual expenses are very high.
• Lyft-Related Software & Apps: Fees paid for ride-hailing apps, GPS navigation, tax preparation software specifically for self-employment, and mileage tracking apps are deductible.
• Phone & Data: If you use your phone for business (navigation, accepting rides, communicating with passengers), you can deduct the percentage of your phone bill attributable to business use. Keep records of your 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 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).

The good news is you get to deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which reduces your overall income tax liability. Don't be alarmed when you see the 15.3% – it's a normal part of being self-employed, and the deduction helps offset it.

Closing Tip for North Carolina Residents

Tax laws can be complex, and this is a general guide. I strongly recommend keeping excellent records of all your income and expenses throughout the year. Consider using accounting software or working with a qualified tax professional, especially if your Lyft income is substantial or your tax situation is complicated. Proactive planning can save you money and stress when it's time to file your 2024 taxes in 2025. Good luck and safe driving!