Lyft Driver Taxes in District of Columbia - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in District of Columbia

Navigating the vibrant streets of the District 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 all 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, which are not automatically withheld from your Lyft payouts.

How District of Columbia Handles Gig Worker Taxes

As a resident of the District of Columbia, you are required to file a District of Columbia individual income tax return, even if your only income is from driving for Lyft. The District utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, the primary form for self-employed individuals to report income and calculate tax liability is Form D-40, Individual Income Tax Return. You will need to report your net earnings from Schedule C on this form. The District of Columbia also allows for itemized deductions, which may further reduce your tax burden. It's important to note that the District generally conforms to federal tax law, but there can be specific differences, particularly regarding deductions and credits. Keep meticulous records of all income and expenses related to your Lyft driving activity. The District of Columbia Office of Tax and Revenue (OTR) provides detailed information and resources for taxpayers, including guidance for self-employed individuals. Failure to file and pay taxes on time can result in penalties and interest. The District also offers options for estimated tax payments throughout the year to avoid underpayment penalties, especially important for those with fluctuating income like Lyft drivers.

For more information, visit the District of Columbia Office of Tax and Revenue: https://otr.dc.gov/

Top Tax Deductions for District of Columbia 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: Driving in the District and surrounding areas often involves tolls, particularly when serving passengers traveling to or from Maryland and Virginia. Keep detailed records of all toll expenses and parking fees incurred while actively driving for Lyft.
• Phone & Data Plan: A portion of your monthly cell phone and data plan is deductible, based on the percentage of time you use it for Lyft-related activities. Maintain a log to support this claim.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, phone mounts, dash cams, and hot bags (for food delivery via Lyft) are all deductible business expenses.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil changes, or repairs) 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, totaling 15.3% on net earnings over $400. You will calculate this tax on Schedule SE (Self-Employment Tax) and include it with your Form 1040.