Lyft Driver Taxes in Massachusetts - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Massachusetts

Navigating the historic streets of Boston and beyond as a Lyft driver offers flexibility, but also brings tax responsibilities. As an independent contractor, earnings from Lyft are considered self-employment income, requiring careful attention to both federal and Massachusetts tax regulations.

The IRS requires all Lyft drivers to report their income on Schedule C (Profit or Loss from Business) with 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 Massachusetts Handles Gig Worker Taxes

As a resident of Massachusetts, filing a state income tax return is mandatory, even if no federal tax is owed. Massachusetts employs a flat income tax rate of 5.0% for the 2025 tax year. This means all taxable income is subject to the same rate. Lyft drivers operating as independent contractors will report their earnings and expenses on Form 1040-EZ, and then transfer that information to Form MA-1040, Massachusetts Form for Filing Income Taxes. Self-employed individuals will also need to file Schedule SE with their federal return to calculate self-employment tax, and then report the amount of self-employment tax paid on Form MA-2210, Massachusetts Schedule of Self-Employment Tax. Massachusetts also offers various credits and deductions that may be applicable to gig workers, such as the Earned Income Tax Credit. It's crucial to maintain accurate records of all income and expenses throughout the year to ensure accurate tax filing. The Massachusetts Department of Revenue provides comprehensive resources and guidance for taxpayers, including information specifically for self-employed individuals.

You can find more information and resources on the Massachusetts Department of Revenue website: https://www.mass.gov/orgs/department-of-revenue

Top Tax Deductions for Massachusetts Drivers

• Standard Mileage: The most common and often most beneficial deduction. For the 2025 tax year, the standard mileage rate is 70 cents per mile. This simplifies expense tracking significantly.
• Tolls & Parking: Massachusetts drivers frequently encounter tolls on the Massachusetts Turnpike and other roadways. These toll expenses, along with parking fees incurred while actively driving for Lyft, are deductible.
• Phone & Data Plan: The portion of your monthly phone and data plan used for Lyft-related activities is deductible. Keep records demonstrating the business use percentage.
• Vehicle-Related Costs: Expenses like car washes, cleaning supplies, phone mounts, dash cams, and insulated food bags (if delivering food via Lyft) are deductible as ordinary and necessary business expenses.

Key Warning: You cannot claim both the standard mileage rate and actual car expenses (gas, oil changes, repairs, insurance, depreciation) for the same vehicle 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 comprises two components: 12.4% for Social Security and 2.9% for Medicare. Unlike traditional employment, Lyft and other gig platforms do not withhold these taxes from your earnings. Therefore, it is your responsibility to calculate and pay this tax, typically through estimated tax payments made quarterly to the IRS and the Massachusetts Department of Revenue.