Lyft Driver Taxes in New York - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in New York

Navigating the bustling streets of New York City as a Lyft driver offers flexibility, but also brings unique tax responsibilities. As an independent contractor, earnings from Lyft are considered self-employment income, requiring careful tracking and reporting to both the IRS and New York State.

The IRS requires all Lyft drivers to report their income on Schedule C (Profit or Loss From Business) when filing their federal income tax return. Furthermore, because no taxes are automatically withheld from your Lyft earnings, drivers are responsible for paying self-employment taxes, which cover both Social Security and Medicare. Failure to properly account for these taxes can result in penalties and interest.

How New York Handles Gig Worker Taxes

As a resident of New York, a state income tax return is required, regardless of income level. New York utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, New York drivers will file using Form IT-201, the Resident Income Tax Return. This form is used to calculate your state income tax liability based on your total income, deductions, and credits. New York also requires you to report your self-employment income on Schedule IT-201-A, which is used to calculate your self-employment tax liability at the state level. It's crucial to accurately report your net earnings from Lyft on this schedule. New York also offers various deductions and credits that may reduce your overall tax burden, such as those related to business expenses. Keep detailed records of all income and expenses to ensure accurate filing. The New York State Department of Taxation and Finance provides comprehensive resources and guidance for self-employed individuals; you can find more information at https://www.tax.ny.gov/. Remember to estimate and pay estimated taxes quarterly to avoid underpayment penalties, especially if your tax liability is expected to be $1,000 or more.

Top Tax Deductions for New York Drivers

• Standard Mileage: The most popular deduction for Lyft drivers. The 2025 rate is 70 cents per mile for business use. Given the high cost of living and frequent stop-and-go traffic in New York City, this rate can significantly reduce your taxable income.
• Tolls & Parking: New York City drivers accumulate significant toll expenses, particularly when crossing bridges and tunnels operated by the MTA. These tolls, along with parking fees incurred while actively working, are fully 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 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 passengers snacks are deductible as ordinary and necessary business expenses.

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 comprises two components: 12.4% for Social Security and 2.9% for Medicare. 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. The 15.3% applies to 92.35% of your net earnings (your gross income minus business deductions) exceeding $400.