Lyft Driver Taxes in Texas - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Texas?

Yes, your income as a Lyft driver is taxable, but the situation in Texas is simpler than in many other states. The federal government taxes all income, regardless of where you live. As a Lyft driver, you are considered self-employed by the IRS, and you'll report your earnings and expenses on Schedule C (Profit or Loss From Business) when you file your federal income tax return (Form 1040). This form calculates your net profit (income minus expenses), which is then added to your other income to determine your adjusted gross income (AGI).

Texas-Specific Rule: Texas does not have a state income tax. This means you will not file a state income tax return and won't owe state income tax on your Lyft earnings. However, you are still responsible for federal income and self-employment taxes.

Top Tax Write-offs for Lyft Drivers

As a self-employed driver, you can significantly reduce your tax liability by claiming eligible business expenses. Here are some key deductions for Lyft drivers:

• Mileage: This is often the largest 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). 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 method requires meticulous record-keeping and may only be beneficial if your actual expenses exceed the standard mileage deduction.
• Phone & Data: If you use your phone for Lyft-related activities (navigation, accepting rides, communication), you can deduct the portion of your phone bill attributable to business use. Keep records of your usage.
• Ride-Sharing Apps Fees: Lyft charges service fees. These fees are deductible as a business expense.

The 15.3% Self-Employment Tax Surprise

Many drivers are surprised to learn about self-employment tax. When you work for an employer, they pay half of your Social Security and Medicare taxes. As a self-employed individual, you are responsible for both the employer and employee portions, totaling 15.3%. This is calculated on Schedule SE (Self-Employment Tax). You only pay self-employment tax on profits over $400. The good news is that you can deduct one-half of your self-employment tax from your gross income on Form 1040, which reduces your overall tax liability.

Closing Tip for Texas Residents

Being a Texas resident offers the benefit of no state income tax, but don't let that lead to underestimating your federal tax obligations as a Lyft driver. Meticulous record-keeping throughout the year – mileage logs, expense receipts, and income statements – is crucial for maximizing your deductions and ensuring accurate tax filing. Consider using accounting software designed for self-employed individuals or consulting with a qualified tax professional to navigate the complexities of self-employment taxes.