Lyft Driver Taxes in Rhode Island - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Rhode Island

Navigating the scenic streets of Providence and Newport 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 tax planning.

The IRS requires all Lyft drivers to report their income on Schedule C (Profit or Loss from Business) with Form 1040. 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 report income and pay taxes can result in penalties and interest.

How Rhode Island Handles Gig Worker Taxes

As a resident of Rhode Island, you are required to file a state income tax return, even if your federal tax liability is zero. Rhode Island utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Rhode Island’s primary form for self-employed individuals to report income is Form RI-1040NR (Nonresident Income Tax Return) or RI-1040 (Rhode Island Resident Income Tax Return), depending on residency status. Rhode Island also requires the Schedule RI-1040-IC, which is used to calculate income from self-employment.

Rhode Island’s tax rates for 2025 are expected to remain consistent with prior years, ranging from 3.75% to 9.99% based on income brackets. It’s crucial to accurately calculate your net earnings from Lyft (total earnings minus business expenses) to determine your Rhode Island tax liability. Rhode Island also offers various credits and deductions that may reduce your overall tax burden. Keep detailed records of all income and expenses to ensure accurate filing. The Rhode Island Division of Taxation provides comprehensive information and resources for taxpayers, including downloadable forms and instructions.

You can find more information and resources on the Rhode Island Division of Taxation website: https://www.ri.gov/taxation/

Top Tax Deductions for Rhode Island Drivers

• Standard Mileage: The most popular deduction for Lyft drivers. The 2025 rate is 70 cents per mile. Given Rhode Island’s relatively high cost of living and frequent short trips, the standard mileage rate is often the most advantageous method.
• Tolls & Parking: Rhode Island drivers may encounter tolls on certain bridges and highways. Keep records of all toll expenses and parking fees paid for business purposes.
• Phone & Data Plan: If you use your personal phone for Lyft driving (which is common), you can deduct the percentage of your monthly bill that corresponds to business use. Keep a log of miles driven and time spent actively driving for Lyft to support this deduction.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, phone mounts, dash cams, and insulated food bags used for deliveries are deductible.

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 largest 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. You can reduce your adjusted gross income (AGI) by one-half of your self-employment tax liability when calculating your income tax.