Lyft Driver Taxes in Pennsylvania - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Pennsylvania

Navigating the bustling streets of Philadelphia, Pittsburgh, or Harrisburg 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 Pennsylvania state tax regulations.

The IRS requires Lyft drivers to report their income on Schedule C (Profit or Loss from Business) with Form 1040. Crucially, this income is also subject to self-employment tax, covering both Social Security and Medicare taxes, which are not automatically withheld from your Lyft payouts. Proper record-keeping throughout the year is essential to accurately calculate income, deductions, and tax liabilities.

How Pennsylvania Handles Gig Worker Taxes

As a resident of Pennsylvania, a state income tax return is required, regardless of income level. Pennsylvania operates under a flat income tax rate of 3.07% for the 2025 tax year. This applies to all taxable income, including earnings from Lyft. Self-employed individuals, including Lyft drivers, must also pay Pennsylvania’s equivalent of the federal self-employment tax, though it's calculated differently. Pennsylvania does not have a separate self-employment tax like the federal government. Instead, your net earnings from self-employment are subject to the flat 3.07% income tax, and you'll also need to pay the standard Social Security and Medicare taxes at the federal level. The primary form for reporting self-employment income and calculating Pennsylvania income tax is Form PA-40. You may also need to file Schedule UE for the calculation of net profit from self-employment. Pennsylvania also offers various credits and deductions that may reduce your tax liability; consulting with a tax professional familiar with Pennsylvania tax law is recommended to maximize these benefits. Remember to keep detailed records of all income and expenses related to your Lyft driving activity, as Pennsylvania may request documentation to support your reported figures. The Pennsylvania Department of Revenue provides comprehensive information and resources for taxpayers on their website: Pennsylvania Department of Revenue.

Top Tax Deductions for Pennsylvania Drivers

• Standard Mileage: The most popular and often most beneficial deduction. The 2025 rate is 70 cents per mile. Given Pennsylvania's diverse terrain and potential for significant mileage, this deduction can substantially reduce taxable income.
• Tolls & Parking: Pennsylvania drivers frequently encounter tolls on the Pennsylvania Turnpike and other roadways. These tolls, along with parking fees incurred while actively driving for Lyft, are deductible business expenses.
• Phone & Data Plan: The portion of your cell phone and data plan used for Lyft driving is deductible. Keep records of your total bill and estimate the percentage of business use.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, 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 deduct both the standard mileage rate and actual car expenses like gas or repairs in the same year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

This 15.3% 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 of these taxes. Lyft does not withhold these taxes from your earnings, so it’s crucial to plan for this liability throughout the year, potentially making estimated tax payments quarterly to avoid penalties.