Lyft Driver Taxes in Indiana - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Indiana

Navigating the streets of Indianapolis and beyond as a Lyft driver offers flexibility, but it also comes with 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, income exceeding $400 necessitates the payment of self-employment taxes, covering both Social Security and Medicare contributions, which are not automatically withheld from your Lyft payouts.

How Indiana Handles Gig Worker Taxes

As a resident of Indiana, you are required to file a state income tax return, even if your only income is from driving for Lyft. Indiana operates under a flat income tax rate, currently at 3.15% for the 2025 tax year. This means all taxable income is taxed at the same percentage. Lyft drivers, classified as independent contractors, will report their earnings and expenses on Schedule SE (Self-Employment Tax) and then transfer that information to Form IT-1040, Indiana’s Resident Income Tax Return. Specifically, self-employed individuals will utilize Schedule IN-SE to calculate their adjusted gross income and determine their Indiana tax liability. It’s important to note that Indiana also requires estimated tax payments if you expect to owe more than $1,000 in state income tax. Failing to make these quarterly payments can result in penalties. Indiana’s Department of Revenue provides comprehensive resources and tools for self-employed individuals, including information on estimated tax payments and filing requirements. Keep meticulous records of all income and expenses throughout the year to ensure accurate reporting and maximize potential deductions. The state also offers various credits and deductions that may apply to your specific situation, so exploring these options is highly recommended.

You can find more information and resources on the Indiana Department of Revenue website: https://www.in.gov/dor/

Top Tax Deductions for Indiana Drivers

• Standard Mileage: The most popular and often simplest deduction. For the 2025 tax year, the standard mileage rate is 70 cents per mile. Given Indiana’s relatively stable gas prices, this rate provides a significant benefit for most drivers.
• Tolls & Parking: While Indiana doesn’t have extensive toll roads like some states, any tolls incurred during Lyft trips are deductible. Parking fees directly related to picking up or dropping off passengers are also deductible.
• Phone & Data Plan: You can deduct the percentage of your phone and data plan that is used for business purposes. Keep a log of your business usage to support this deduction.
• Vehicle-Related Costs: Expenses like car washes, phone mounts, dash cams, first-aid kits, and hot bags (for food delivery through Lyft) are all deductible as 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, totaling 15.3% on net earnings over $400. This is calculated on Schedule SE and reported with your Form 1040.