Lyft Driver Taxes in Oregon - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Oregon

Navigating the scenic byways and bustling cities of Oregon as a Lyft driver offers flexibility, but also brings unique 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 as self-employment income on Schedule C (Profit or Loss From Business) when filing their federal income tax return. Earnings over $400 necessitate the payment of self-employment taxes, which cover both Social Security and Medicare contributions. Accurate record-keeping throughout the year is essential to maximize deductions and minimize tax liability.

How Oregon Handles Gig Worker Taxes

As a resident of Oregon, filing a state income tax return is mandatory, even if no federal tax is owed. Oregon utilizes a graduated income tax system, meaning the tax rate increases as income rises. For the 2025 tax year, self-employed individuals will primarily use Form OR-40, Oregon Individual Income Tax Return, to report their Lyft earnings. This form requires reporting net earnings from Schedule C as part of your overall income. Oregon also requires you to calculate and pay estimated taxes quarterly if you expect to owe $1,000 or more in state income tax. Failure to do so may result in penalties. The Oregon Department of Revenue offers resources and tools to help with estimated tax payments. Furthermore, Oregon allows for certain deductions that can reduce your taxable income, such as contributions to Oregon’s retirement savings plans. It’s important to note that Oregon’s tax laws can be complex, and consulting with a tax professional familiar with Oregon state tax regulations is highly recommended, especially when dealing with self-employment income. The state also offers a small business guide that can be helpful.

You can find more information and resources on the Oregon Department of Revenue website: Oregon Department of Revenue

Top Tax Deductions for Oregon Drivers

• Standard Mileage: The most popular deduction for Lyft drivers. For the 2025 tax year, the standard mileage rate is 70 cents per mile. This simplifies expense tracking significantly.
• Tolls & Parking: Keep records of any tolls incurred while driving for Lyft, as well as parking fees directly related to pickups and drop-offs. While Oregon doesn't have widespread toll roads, parking in cities like Portland can add up.
• Phone & Data Plan: You can deduct the percentage of your phone and data plan that is used for Lyft driving. For example, if you use your phone 50% for Lyft, you can deduct 50% of the bill.
• Vehicle-Related Costs: Expenses like car cleaning supplies, phone mounts, dash cams, and even hot bags for food delivery (if you also drive for a food delivery service) are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil changes, repairs, insurance) 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. This combined rate of 15.3% applies to your net earnings (income after deductions) exceeding $400.