Lyft Driver Taxes in Delaware - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Delaware

Navigating the scenic routes of the First State as a Lyft driver offers flexibility, but also brings unique tax responsibilities. As an independent contractor, understanding these obligations is crucial for a smooth tax season.

The IRS requires Lyft drivers to report their earnings on Schedule C (Profit or Loss From Business) as part of their Form 1040. Furthermore, earnings exceeding $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions. Accurate record-keeping throughout the year is paramount to maximize deductions and ensure compliance.

How Delaware Handles Gig Worker Taxes

As a resident of Delaware, a state income tax return is required, regardless of income level. Delaware utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Delaware drivers operating as independent contractors will primarily use Form 1040-ES to estimate and pay quarterly taxes, and Form 1040 (Delaware) to file their annual state income tax return. Delaware does not have local income taxes levied by cities or counties, simplifying the filing process. It's important to note that Delaware’s tax brackets and rates are subject to change annually, so consulting the Delaware Division of Revenue website for the most up-to-date information is essential. Delaware also offers various credits and deductions that may apply to self-employed individuals, such as those related to business expenses or retirement contributions. Failure to file and pay state income taxes on time can result in penalties and interest charges. Maintaining detailed records of all income and expenses is vital for accurate reporting and potential audit defense. Delaware’s tax laws are generally considered favorable to small businesses, but proactive tax planning is still recommended.

For more information, please visit the Delaware Division of Revenue: https://revenue.delaware.gov/

Top Tax Deductions for Delaware Drivers

• Standard Mileage: The most popular deduction for Lyft drivers. For the 2025 tax year, the rate is 70 cents per mile. This simplifies expense tracking significantly.
• Tolls & Parking: Delaware drivers frequently encounter tolls on the Delaware Turnpike. These tolls, along with any parking fees incurred while actively driving for Lyft, are deductible.
• Phone & Data Plan: The portion of your monthly phone and data bill directly related to your Lyft driving activities is deductible. Keep a log of business usage to support this deduction.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, phone mounts, dash cams, and insulated food bags used for deliveries are all deductible business expenses.

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

Understanding the 15.3% Self-Employment Tax

This tax covers both Social Security and Medicare taxes. Unlike traditional employment where these taxes are withheld from your paycheck, as a Lyft driver, you are responsible for paying both the employer and employee portions. This combined rate of 15.3% applies to your net earnings (income after deductions) exceeding $400. Platforms like Lyft do not withhold these taxes, so proactive tax planning and potentially making quarterly estimated tax payments are crucial to avoid penalties.