Lyft Driver Taxes in Hawaii - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Hawaii

Trading the scenic routes of Oahu or the Big Island for fares as a Lyft driver offers flexibility, but also brings 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 as self-employment income on Schedule C (Profit or Loss From Business) when filing their federal income tax return. Earnings over $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 Hawaii Handles Gig Worker Taxes

As a resident of Hawaii, a state income tax return is required, regardless of income level. Hawaii operates on a graduated income tax system, meaning the tax rate increases as your income rises. This means the more you earn driving for Lyft, the higher percentage of your income will be taxed. The primary form for self-employed individuals to report income and calculate tax liability is Form N-11, the Hawaii Individual Income Tax Return. Hawaii also has a General Excise Tax (GET) which applies to most business activities. While Lyft typically handles the GET collection and remittance on behalf of drivers, it’s important to be aware of its existence. Drivers should retain accurate records of all income and expenses to accurately calculate their state tax liability. Hawaii’s Department of Taxation offers resources and guidance for self-employed individuals, including information on estimated tax payments, which may be required if you anticipate owing more than $500 in state taxes. Failing to file and pay state taxes on time can result in penalties and interest. It is also important to note that Hawaii does not offer a standard mileage rate deduction that mirrors the federal rate; drivers must calculate actual expenses.

For more information and resources, please visit the Hawaii Department of Taxation: https://tax.hawaii.gov/

Top Tax Deductions for Hawaii Drivers

• Standard Mileage: While Hawaii does not conform to the federal standard mileage rate, drivers can still deduct actual vehicle expenses. The 2025 federal rate is 70 cents per mile, which can be used as a benchmark for evaluating the cost of operating your vehicle.
• Tolls & Parking: While Hawaii doesn't have traditional toll roads, parking fees incurred while actively working as a Lyft driver are deductible. Keep receipts for parking at airports, shopping centers, or while waiting for ride requests.
• Phone & Data Plan: The portion of your monthly phone and data plan used for Lyft-related activities is deductible. If you use your phone 70% for Lyft and 30% for personal use, you can deduct 70% of the bill.
• Vehicle-Related Costs: Expenses like car washes (to maintain a professional appearance), phone mounts, dash cams, and supplies like hand sanitizer or hot bags for food deliveries (if permitted by Lyft) 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 larger deduction.

Understanding the 15.3% Self-Employment Tax

This tax comprises Social Security and Medicare taxes. Unlike traditional employment where your employer withholds these taxes, as a Lyft driver, you are responsible for paying both the employer and employee portions, totaling 15.3% on net earnings exceeding $400. This is paid through Schedule SE (Self-Employment Tax) when filing your federal income tax return.