Turo Host Taxes in Phoenix, Arizona - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Turo Hosts in Phoenix, Arizona

With the Valley of the Sun serving as a perennial hub for tourism and major events, hosting on Turo in Phoenix is more than just a side hustle: it's a legitimate business opportunity. Whether you are staging vehicles near Sky Harbor International Airport or catering to Spring Training fans in Scottsdale, your earnings come with specific tax obligations. As a host, your rental income is typically classified as self-employment income, which means you'll need to maintain rigorous records to protect your margins.

The IRS requires you to report your Turo earnings on Schedule C (Profit or Loss From Business) as part of your Form 1040. If your net earnings exceed $400, you're also responsible for self-employment taxes to cover Social Security and Medicare. However, there is a significant benefit many new hosts overlook: the Qualified Business Income (QBI) deduction. If you qualify, the QBI allows you to deduct up to 20% of your business income from your taxable income, providing a substantial shield against federal income tax.

How Arizona Handles Gig Worker Taxes

If you live or operate in Arizona, you'll also need to navigate the state's tax landscape. Arizona utilizes a simplified flat income tax system. For the 2025 tax year, the state tax rate is 2.5% on your net earnings. While this rate is lower than many neighboring states, it's vital to report your income accurately on Form 540 to avoid penalties. You'll likely use Schedule A to itemize if your deductions exceed the standard amount, and you should keep an eye on Schedule H for any applicable state-level tax credits.

Operating in Phoenix specifically adds a layer of local consideration. For example, if you pay for premium parking spots in downtown Phoenix or use paid delivery zones at the airport to facilitate car handoffs, those are direct business costs. Arizona's Department of Revenue (ADOR) is strict about documentation, so keep every digital receipt. You can find updated forms and guidance directly on the Arizona Department of Revenue website.

Maximize Your Savings: Deductions and the Advanced Calculator

To keep more of what you earn in the East Valley or West Valley, you must choose the right deduction strategy. This is where our Advanced Calculator becomes your most valuable tool. You can now run the numbers to compare "Standard Mileage" against "Actual Expenses" to see which one saves you more money.

• Standard Mileage Rate: For 2025, the rate is 70 cents per mile. Because Phoenix is so spread out - with long hauls between North Scottsdale and Gilbert - this rate often results in a massive deduction that covers gas, insurance, and general wear and tear.
• Actual Expenses and Depreciation: In many cases, especially with newer or high-end luxury vehicles used for Turo, deducting actual expenses is the smarter move. Our calculator allows you to factor in gas, repairs, insurance, and critically, Depreciation. Accelerated depreciation can sometimes offer a much larger tax break than the mileage rate alone.
• Home Office Savings: Many Phoenix hosts manage their fleet, bookings, and cleaning schedules from a dedicated home office. Our calculator helps you determine your "Home Office" deduction based on the square footage of your workspace, allowing you to deduct a portion of your rent, mortgage interest, and utilities.
• Phoenix-Specific Costs: Don't forget to track your "City of Phoenix" business license fees, airport delivery permits, and detailing supplies used to clear out that desert dust.

Expert Tip: You can't flip-flop between methods easily. If you want to use the standard mileage rate, you must choose to use it in the first year the car is available for use in your business. In later years, you can then choose between the two methods.

Understanding the 15.3% Self-Employment Tax

When you're an employee, your boss pays half of your FICA taxes. When you're the boss on Turo, you're responsible for the full 15.3%. This is broken down into 12.4% for Social Security and 2.9% for Medicare. It's a common trap for new hosts to forget this "hidden" tax, as Turo does not withhold it from your payouts. We recommend setting aside roughly 25% to 30% of your net income to cover both federal and state income taxes plus this self-employment contribution. This ensures you aren't hit with a surprise bill - or underpayment penalties - when April 15th rolls around.