Lyft Driver Taxes in Tennessee - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Tennessee?

Yes, your income as a Lyft driver is taxable, but the specifics are a bit different in Tennessee. While Tennessee doesn't have a state income tax on wages or salaries, income earned through self-employment (like driving for Lyft) is still subject to federal income tax and self-employment tax.

You'll report your Lyft income and expenses on Schedule C (Profit or Loss From Business) when you file your federal income tax return (Form 1040). Schedule C allows you to deduct your business expenses, reducing your taxable income. Lyft will send you a Form 1099-K detailing your earnings for the year, which you'll use to prepare your Schedule C.

Because Tennessee has no state income tax, you won't file a state income tax return related to your Lyft earnings. However, you are still responsible for federal taxes.

Top Tax Write-offs for Lyft Drivers

As a Lyft driver, you can significantly reduce your tax liability by taking advantage of available deductions. Here are some key write-offs:

• 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 driving).
• 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. You must choose one method (mileage or actual expenses) and be consistent.
• Phone Expenses: If you use your phone for Lyft-related activities (navigation, accepting rides, etc.), you can deduct the portion of your phone bill attributable to business use.
• Ride-Sharing Apps & Software: Fees paid to Lyft, as well as the cost of any tax preparation software specifically used for your driving income, are deductible.

The 15.3% Self-Employment Tax Surprise

Many drivers are surprised to learn about self-employment tax. 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 total of 15.3%. This is calculated on Schedule SE (Self-Employment Tax). You only pay self-employment tax on profits exceeding $400. The good news is that you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040.

Closing Tip for Tennessee Residents

While you benefit from Tennessee’s lack of state income tax, diligent record-keeping is crucial for maximizing your federal tax savings as a Lyft driver. Keep detailed logs of your mileage, expenses, and income throughout the year. Consider using accounting software or working with a tax professional to ensure you're taking all eligible deductions and complying with all federal tax regulations. Don't wait until tax season to get organized!