Lyft Driver Taxes in North Dakota - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in North Dakota?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and North Dakota state levels. As an independent contractor, Lyft will not withhold income taxes for you. This means you are responsible for paying these taxes yourself, typically through quarterly estimated tax payments.

Federal Taxes: You'll report your Lyft income on Schedule C (Profit or Loss From Business) as part of your Form 1040. Schedule C allows you to deduct business expenses (more on that below), reducing your taxable income. The net profit (income minus expenses) from Schedule C is then reported on your Form 1040 and is subject to income tax based on your overall income.

North Dakota State Taxes: North Dakota has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your Lyft income, after federal adjustments and deductions, will be subject to North Dakota income tax based on the applicable tax brackets for the 2024 tax year (filing in 2025). You'll use Form ND-1 to file your North Dakota state income tax return. You'll need to calculate your North Dakota taxable income and apply the correct tax rates.

Top Tax Write-offs for Lyft Drivers

Maximizing your deductions is key to minimizing your tax liability. Here are some common deductions for Lyft drivers:

• 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 like Stride or Everlance to help with this.
• 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 method requires meticulous record-keeping and is generally only beneficial if your actual expenses exceed the standard mileage deduction.
• Phone Expenses: If you use your phone for Lyft-related activities (navigation, accepting rides, communication with passengers), you can deduct the percentage of your phone bill attributable to business use.
• Lyft-Specific Software & Fees: Any fees paid to Lyft, or costs for apps/software used specifically for driving (e.g., tax tracking apps), are deductible.

The 15.3% Self-Employment Tax Surprise

Because you're an independent contractor, you're considered self-employed. This means 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 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). The good news is you only pay self-employment tax on 92.35% of your net earnings from Schedule C. You do get to deduct one-half of your self-employment tax from your gross income on Form 1040, which helps reduce your overall income tax liability.

Closing Tip for North Dakota Residents

Don't wait until April to think about your taxes! Consider making quarterly estimated tax payments to the IRS and the North Dakota State Tax Department. This helps avoid penalties and interest. Keep excellent records of all your income and expenses throughout the year. Consulting with a qualified tax professional, especially one familiar with self-employment taxes and North Dakota state tax laws, can save you money and ensure you're compliant. Good luck and safe driving!