Turo Host Taxes in North Dakota - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Turo Hosts in North Dakota

With the wide-open roads and growing tourism in North Dakota, renting out a vehicle through Turo presents a unique income opportunity for residents. However, alongside the potential earnings comes the critical responsibility of accurate tax reporting to both federal and state authorities.

As a Turo host, your earnings are considered self-employment income, meaning you're operating a small business in the eyes of the IRS. This requires filing a Schedule C (Profit or Loss from Business) with your annual Form 1040. Crucially, this income is also subject to self-employment tax, which covers your contributions to both Social Security and Medicare. Unlike traditional employment, these taxes are not automatically withheld by Turo, so it's your responsibility to calculate and pay them throughout the year.

Navigating North Dakota's Gig Worker Taxes

North Dakota, like most states, requires residents to file a state income tax return if their income exceeds specific thresholds. As a self-employed individual earning income through Turo, you will need to report your net business earnings on your North Dakota income tax return. The state operates on a graduated income tax system, meaning your tax rate increases as your taxable income rises. For the 2025 tax year, understanding these brackets is essential for accurately calculating your state tax liability.

The primary form for self-employed individuals to report income in North Dakota is Form ND-1, North Dakota Individual Income Tax Return. You'll likely also need Schedule ND-1S, which is specifically used to calculate income from sources other than wages, such as your Turo earnings. While North Dakota does allow for itemized deductions, many taxpayers find the state's standard deduction to be simpler and sufficiently beneficial. Always choose the method that yields the largest tax savings for you.

Remember, diligent record-keeping of all income and expenses related to your Turo business is paramount for both federal and state reporting. The North Dakota Office of State Tax Commissioner provides comprehensive information and resources for taxpayers, including downloadable forms and instructions. You can find more information at North Dakota Office of State Tax Commissioner.

Top Tax Deductions for Turo Hosts in North Dakota

Maximizing your deductions is key to reducing your taxable income and, consequently, your tax bill. As a Turo host, you have access to a wide array of legitimate business expenses.

Vehicle-Related Deductions: Mileage vs. Actual Expenses

This is often the largest deduction for Turo hosts, and you have two primary options:

• Standard Mileage Rate: For the 2025 tax year, the IRS allows you to deduct 70 cents per business mile driven. This includes miles for picking up/dropping off vehicles, cleaning, maintenance, repairs, or any other Turo-related travel. Given North Dakota's often harsh winter conditions and the need for reliable transportation, the standard mileage rate offers a straightforward way to account for vehicle wear and tear without tracking every individual car expense.
• Actual Car Expenses: This method allows you to deduct a percentage of your actual vehicle expenses based on your business use. This includes gas, oil, repairs, tires, insurance, registration fees, and crucially, depreciation. Depreciation allows you to recover the cost of your vehicle over several years. This can sometimes lead to a larger deduction, especially for newer, more expensive vehicles or if you have significant repair costs.

Important Choice: You cannot deduct both the standard mileage rate and actual car expenses (including gas, repairs, and depreciation) for the same vehicle in the same tax year. You must choose one method. Our Advanced Calculator is designed to help you compare these two options side-by-side, including the impact of depreciation, so you can make an informed decision for maximum savings.

Other Key Business Deductions

• Tolls & Parking: While North Dakota doesn't have an extensive toll road system, any parking fees incurred while preparing a vehicle for rental, during pick-up/drop-off, or for business-related appointments are fully deductible.
• Phone & Data Plan: If you use your personal cell phone for Turo-related communication-scheduling, customer service, coordinating maintenance, or managing your listings-you can deduct the percentage of your monthly bill attributable to business use.
• Cleaning & Supplies: Expenses like car wash services, cleaning supplies, air fresheners, or small amenities (like bottled water or snacks) offered to renters are all deductible business expenses.
• Maintenance & Repairs: Beyond what's covered by the actual expenses method, if you opt for standard mileage, specific maintenance items directly tied to preparing a car for a rental or ensuring its safety can still sometimes be considered. However, this is more straightforward under actual expenses.
• Insurance Premiums: While Turo provides its own protection plans, any additional commercial insurance policies you purchase specifically for your Turo business are deductible.
• Turo Fees & Commissions: Any fees or commissions Turo charges you as part of their service are legitimate business expenses.
• Home Office Deduction: If you use a portion of your home exclusively and regularly for your Turo business-for example, managing bookings, accounting, or communicating with renters-you may be eligible for the home office deduction. Our Advanced Calculator can also help you determine your potential savings from this often-overlooked deduction.
• Business Licenses & Permits: While less common for Turo, if any local North Dakota municipality requires a specific business license or permit for vehicle rentals, the cost is deductible.
• Professional Fees: Costs for tax preparation software, professional tax advice, or legal services related to your Turo business are deductible.
• Bank Fees: If you have a separate bank account for your Turo business, any associated fees are deductible.

The Qualified Business Income (QBI) Deduction - A 20% Tax Saver

Beyond your standard business expenses, many Turo hosts can also take advantage of the Qualified Business Income (QBI) deduction, sometimes called the Section 199A deduction. This powerful federal deduction allows eligible self-employed individuals to deduct up to 20% of their qualified business income from their taxable income.

This deduction is taken at the individual level on your personal tax return (Form 1040) and can significantly reduce your overall income tax liability, effectively acting as an additional 20% discount on your business profits before your tax rate is even applied. There are income limitations and other rules that can affect eligibility and the amount of the deduction, so it's wise to consult with a tax professional to ensure you're maximizing this benefit.

Understanding the 15.3% Self-Employment Tax

The 15.3% self-employment tax is comprised of two parts: 12.4% for Social Security (up to an annual income limit) and 2.9% for Medicare (with no income limit). As mentioned, unlike traditional employment, Turo-and other gig platforms-does not withhold these taxes from your earnings. Therefore, it's solely your responsibility to calculate and pay this tax.

To avoid penalties from the IRS, you should generally make estimated tax payments throughout the year if you expect to owe at least $1,000 in tax. These payments are typically due quarterly: April 15, June 15, September 15, and January 15 of the following year. A helpful benefit: you can deduct one-half of your self-employment tax from your gross income when calculating your adjusted gross income (AGI) on your Form 1040, further reducing your overall tax burden.