Lyft Driver Taxes in Maryland - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Maryland

Navigating the historic streets of Baltimore or the scenic routes of Ocean City as a Lyft driver offers flexibility, but also comes with tax responsibilities. As an independent contractor, earnings from Lyft are considered self-employment income, requiring careful tax planning.

The IRS requires Lyft drivers to report their income on Schedule C (Profit or Loss from Business) with Form 1040. Crucially, this income is also subject to self-employment tax, covering both Social Security and Medicare taxes, which are not automatically withheld from your Lyft payouts. Accurate record-keeping throughout the year is essential to maximize deductions and ensure compliance.

How Maryland Handles Gig Worker Taxes

As a resident of Maryland, filing a state income tax return is mandatory, even if no federal tax is due. Maryland utilizes a graduated income tax system, meaning the tax rate increases as your income rises. This means your tax liability isn't a flat percentage; it's calculated based on income brackets. Lyft drivers operating in Maryland will report their self-employment income on Form 540, Maryland Return of Income, and Schedule SE, which calculates the Maryland equivalent of the federal self-employment tax. Maryland also offers various credits and deductions that may apply to gig workers, such as the Work Opportunity Tax Credit if eligible. It's important to note that Maryland conforms to many federal deductions, but there can be differences, so consulting a tax professional or reviewing the Maryland Department of Taxation guidelines is highly recommended. Furthermore, estimated tax payments may be required throughout the year if your tax liability is expected to exceed $500. Failure to make these payments could result in penalties. The state also has specific rules regarding the apportionment of income if a driver operates in multiple states, though this is less common for primarily Maryland-based Lyft drivers.

Top Tax Deductions for Maryland Drivers

• Standard Mileage: The most popular deduction for Lyft drivers. For the 2025 tax year, the standard mileage rate is 70 cents per mile. This simplifies expense tracking significantly.
• Tolls & Parking: Maryland drivers frequently encounter tolls, particularly when traveling through the Baltimore-Washington corridor. These tolls, along with any business-related parking fees, are deductible.
• Phone & Data Plan: If you use your phone for Lyft-related activities (navigation, accepting rides, communication), you can deduct the percentage of your monthly bill attributable to business use.
• Vehicle-Related Costs: Expenses like car washes, phone mounts, dash cams, first-aid kits, and even hot bags for food deliveries (if you also drive for delivery services) can be deducted as business expenses.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil changes, 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 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. Lyft and other gig platforms do not withhold these taxes from your earnings, so it’s crucial to factor this into your tax planning and potentially make quarterly estimated tax payments to avoid penalties.

Resources: For more information on Maryland state taxes, please visit the Maryland Department of Taxation: https://www.marylandtaxes.gov/