Lyft Driver Taxes in Arkansas - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Arkansas

Navigating the scenic byways and bustling cities of Arkansas as a Lyft driver offers flexibility, but also brings unique tax responsibilities. As an independent contractor, earnings from Lyft are considered self-employment income, requiring diligent record-keeping and accurate tax filing.

The IRS requires Lyft drivers to report their income on Schedule C (Profit or Loss from Business) with Form 1040. Furthermore, because no taxes are automatically withheld from your Lyft earnings, drivers are responsible for paying self-employment taxes, which cover both Social Security and Medicare. Failure to properly account for these taxes can result in penalties and interest.

How Arkansas Handles Gig Worker Taxes

As a resident of Arkansas, a state income tax return is required, regardless of whether you owe any tax. Arkansas utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Arkansas residents filing as self-employed individuals will primarily use Form AR1040 and Schedule IN (Income). It's crucial to accurately report your net earnings from Schedule C on your Arkansas return. Arkansas also allows for certain deductions that can reduce your taxable income, mirroring some federal deductions. Keep detailed records of all income and expenses to ensure accurate filing. The Arkansas Department of Finance and Administration provides comprehensive information and resources for taxpayers, including downloadable forms and instructions. Be aware that Arkansas does not offer a specific "gig worker" tax form; you'll use the standard individual income tax forms, but the Schedule IN is key for reporting self-employment income. Estimated tax payments may be required quarterly if you anticipate owing $1,000 or more in Arkansas income tax. Consulting with a tax professional familiar with Arkansas tax law is highly recommended to ensure compliance and maximize potential deductions.

You can find more information and resources on the Arkansas Department of Finance and Administration website: Arkansas Department of Finance and Administration

Top Tax Deductions for Arkansas Drivers

• Standard Mileage: The most popular and often simplest deduction. For the 2025 tax year, the standard mileage rate is 70 cents per mile. This rate covers wear and tear, gas, oil, and other vehicle-related expenses.
• Tolls & Parking: Keep receipts for any tolls incurred while actively driving for Lyft, as well as parking fees directly related to pickups or drop-offs. While Arkansas doesn't have extensive toll roads, any tolls encountered during trips are deductible.
• Phone & Data Plan: You can deduct the percentage of your phone and data plan that is used for business purposes. If you use your phone 70% of the time for Lyft driving, you can deduct 70% of the bill.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, phone mounts, dash cams, and insulated food bags used for deliveries are deductible. Keep receipts for these items.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil, repairs, insurance) in the same tax year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

The 15.3% self-employment tax is comprised of two parts: 12.4% for Social Security and 2.9% for Medicare. Lyft and other gig platforms do not withhold these taxes from your earnings, making it your responsibility to calculate and pay them. This tax applies to your net earnings – your gross income minus your business expenses – exceeding $400. You'll calculate this tax on Schedule SE (Self-Employment Tax) and include it with your Form 1040.