Turo Host Taxes in Arizona - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Turo Hosts in Arizona

Sharing your vehicle on Turo offers a flexible income stream, especially with Arizona’s diverse landscapes attracting both tourists and locals needing temporary transportation. However, this income is taxable, and understanding your obligations is crucial for a smooth tax season.

As a Turo host, the IRS considers your earnings self-employment income. This means you’ll report your profits and losses on Schedule C (Profit or Loss From Business) when filing your federal income tax return. Crucially, this income is also subject to self-employment taxes, covering both Social Security and Medicare, which Turo does not withhold. Accurate record-keeping throughout the year is essential to maximize deductions and minimize your tax liability.

How Arizona Handles Gig Worker Taxes

Arizona, like most states, requires residents to file a state income tax return if their income exceeds certain thresholds. As a Turo host earning income as an independent contractor, you are responsible for reporting your net earnings (income after deductions) on your Arizona state income tax return. Arizona operates under a flat income tax rate, meaning all income is taxed at the same percentage, regardless of income level. For the 2025 tax year, the Arizona flat income tax rate is currently 2.5%. This rate is subject to change, so it’s important to verify the current rate when filing. The primary form used for filing state income taxes as a self-employed individual in Arizona is Form 140, Arizona Individual Income Tax Return. You will likely also need to file Schedule A (Arizona Adjustments to Federal Income) to report any Arizona-specific adjustments to your federal income. Arizona also requires you to pay estimated taxes quarterly if you expect to owe $1,000 or more in state income tax. Failure to do so may result in penalties. Resources and forms can be found on the Arizona Department of Revenue website: https://azdor.gov/. Remember to keep detailed records of all income and expenses related to your Turo hosting activity to accurately complete your Arizona tax return.

Top Tax Deductions for Arizona Drivers

• Standard Mileage: The #1 deduction for many Turo hosts. The 2025 rate is 70 cents per mile. Given Arizona’s sprawling cities and popular road trip destinations like the Grand Canyon, the standard mileage rate can result in significant savings.
• Tolls & Parking: While Arizona doesn’t have extensive toll roads, any tolls incurred during vehicle delivery or pick-up are deductible. Parking fees directly related to Turo business are also deductible.
• Phone & Data Plan: If you use your phone for Turo-related communication (scheduling, messaging with renters), you can deduct the percentage of your phone bill attributable to business use.
• Vehicle-Related Costs: Expenses like car wash supplies to keep your vehicle presentable for renters, phone mounts for navigation, or even small amenities offered to renters (like phone chargers) are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas or repairs in the same year. Choose the method that yields the greater deduction.

Understanding the 15.3% Self-Employment Tax

The 15.3% self-employment tax covers both Social Security and Medicare taxes. Unlike traditional employment where these taxes are withheld from your paycheck, as a Turo host, you are responsible for paying both the employer and employee portions of these taxes. This is calculated on your net earnings (income after business deductions) exceeding $400.