Lyft Driver Taxes in Montana - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Montana

Navigating the Big Sky Country 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. Platforms such as Lyft do not withhold these taxes, making proactive tax planning essential.

How Montana Handles Gig Worker Taxes

As a Montana resident, filing a state income tax return is required, even if no federal tax is owed. Montana operates under a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Montana’s primary form for self-employed individuals is Form 17. This form is used to calculate your adjusted gross income, deductions, and ultimately, your Montana income tax liability. Montana also allows for itemized deductions similar to the federal level, potentially reducing your taxable income. It's important to note that Montana’s tax brackets and rates are subject to change annually, so referencing the latest information from the Montana Department of Revenue is vital. Montana also has a credit for taxes paid to another state, which may be relevant if you drove in neighboring states. Keep detailed records of all income and expenses related to your Lyft driving activity to accurately complete your Montana tax return. Failure to file or pay taxes on time can result in penalties and interest.

For more information and resources, please visit the Montana Department of Revenue: https://revenue.mt.gov/

Top Tax Deductions for Montana Drivers

• Standard Mileage: The most popular deduction for Lyft drivers. For the 2025 tax year, the standard mileage rate is 70 cents per mile. Given Montana’s vast distances and potential for significant mileage, this deduction can substantially reduce your tax burden.
• Tolls & Parking: While Montana doesn’t have extensive toll roads, any parking fees directly related to your Lyft driving activities are deductible. Keep receipts for these expenses.
• Phone & Data Plan: If you use your personal phone for Lyft driving (which is common), you can deduct the percentage of your phone bill that corresponds to business use. Carefully track the time and data used for work versus personal purposes.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, phone mounts, dash cams, and insulated food bags used for deliveries are deductible. Maintain receipts for these purchases.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil changes, or repairs) 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. Remember to factor this into your tax planning throughout the year to avoid a large tax bill when filing.