Lyft Driver Taxes in Boston, Massachusetts - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Boston, Massachusetts

Navigating the historic streets of Boston as a Lyft driver offers flexibility, but also brings unique tax considerations. Successfully managing these responsibilities is crucial for avoiding penalties and maximizing returns.

As a Lyft driver, you are considered an independent contractor by both the IRS and the Commonwealth of Massachusetts. This means you’re responsible for reporting your income on Schedule C (Profit or Loss from Business) with your federal tax return (Form 1040). Furthermore, because you are self-employed, you’ll also need to calculate and pay self-employment taxes, covering both Social Security and Medicare, which are not automatically withheld from your earnings like they would be with a traditional employer.

How Massachusetts Handles Gig Worker Taxes

As a resident of Massachusetts, you are required to file a state income tax return, even if your only income is from driving for Lyft. Massachusetts utilizes a flat income tax rate of 5.0% for the 2025 tax year. This means all taxable income, regardless of the amount, is taxed at this single rate. Lyft drivers operating in Boston should be aware that the city’s high demand, particularly during events at Fenway Park, TD Garden, and major conventions, can lead to significant earnings, increasing the importance of accurate tax reporting. Parking in Boston can also be a substantial expense, and keeping detailed records of parking fees is essential for maximizing deductions. The primary form for self-employed individuals to report income and calculate taxes is Form 1 (Massachusetts Form 1, Income Tax Return). You will likely also need to file Schedule SE (Self-Employment Tax) with your federal return, which then feeds into your Massachusetts return. Massachusetts also offers various credits and deductions that may be applicable to self-employed individuals, so exploring these options is recommended. Remember to keep meticulous records of all income and expenses throughout the year to simplify the filing process. For more detailed information and resources, please visit the Massachusetts Department of Revenue website: Massachusetts Department of Revenue.

Top Tax Deductions for Boston, Massachusetts Drivers

• Standard Mileage: The most popular and often simplest deduction. For the 2025 tax year, the standard mileage rate is 70 cents per mile. This rate covers wear and tear, gas, oil, and other vehicle-related expenses.
• Tolls & Parking: Boston’s roadways and parking regulations can be costly. Keep detailed records of all tolls paid, including those on the Massachusetts Turnpike (I-90), and all parking fees incurred while actively working.
• Phone & Data Plan: If you use your phone for business purposes (navigation, accepting rides, communicating with passengers), you can deduct the percentage of your monthly bill that corresponds to business use.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, phone mounts, dash cams, and even insulated food bags for delivering food alongside rides are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil, 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 is comprised of two parts: 12.4% for Social Security and 2.9% for Medicare. Lyft and other ride-sharing platforms do not withhold these taxes from your earnings. You are responsible for calculating and paying this tax on your net earnings (income minus business expenses) exceeding $400. You can often pay estimated taxes quarterly to avoid penalties at the end of the year.