Lyft Driver Taxes in Virginia - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Lyft Driver income taxable in Virginia?

Yes, income earned as a Lyft driver is absolutely taxable, both at the federal and Virginia state levels. As an independent contractor, you are considered self-employed by both the IRS and the Virginia Department of Taxation. This means you're responsible for reporting your earnings and paying all applicable taxes.

Federal Taxes: You'll report your Lyft income on Schedule C (Profit or Loss from Business) as part of your Form 1040. This form allows you to deduct business expenses (more on that below) to arrive at your taxable profit. The official 2024 standard mileage rate is 67 cents per mile for business use of your vehicle. Keep meticulous records of your mileage!

Virginia State Taxes: Virginia has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your Lyft income, after deducting allowable expenses, will be added to your other income sources (like a W-2 job) to determine your total taxable income and the corresponding tax rate. Virginia also requires you to file a state income tax return (Form 505) to report this income.

Top Tax Write-offs for Lyft Drivers

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

• Mileage: As mentioned, the 2024 standard mileage rate is 67 cents per mile. You can deduct this amount for every business mile driven (from the time you log into the Lyft app until you log out, intending to work). Alternatively, you can deduct actual expenses (gas, oil, repairs, insurance, depreciation), but the standard mileage rate is often more beneficial. You must choose one method and be consistent.
• Lyft-Related Software & Apps: Expenses for apps used specifically for driving (e.g., Stride Tax, Everlance for mileage tracking) are deductible.
• Phone Expenses: You can deduct the portion of your cell phone bill that relates to your Lyft driving activities. If you use your phone solely for driving, you can deduct the entire bill. Otherwise, you'll need to calculate the business use percentage.
• Vehicle Expenses (if not using mileage rate): If you choose to deduct actual vehicle expenses instead of mileage, you can deduct costs like gas, oil changes, repairs, maintenance, insurance, registration fees, and depreciation. Keep all receipts!

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 combined 15.3%. This is calculated on Schedule SE (Self-Employment Tax). However, 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 adjusted gross income on Form 1040, which can lower your overall tax bill.

Closing Tip for Virginia Residents

Tax laws can be complex, and it's easy to miss deductions or make errors. Consider using tax software designed for independent contractors, or better yet, consult with a qualified tax professional in Virginia. Keeping accurate records throughout the year – mileage logs, receipts for expenses, and income statements from Lyft – will make filing your taxes much smoother and ensure you're paying the correct amount. Don't wait until the last minute! Good luck, and safe driving!