Lyft Driver Taxes in South Carolina - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in South Carolina

Navigating the Palmetto State as a rideshare driver with Lyft 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 federal government and the state of South Carolina.

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 South Carolina Handles Gig Worker Taxes

As a resident of South Carolina, a state income tax return is required, regardless of income level. South Carolina employs a graduated income tax system, meaning the tax rate increases as your income rises. Lyft drivers, classified as independent contractors, are subject to this tax on their net earnings after allowable deductions. The primary form for self-employed individuals to report income and calculate tax liability is South Carolina Form SC1040. It's crucial to accurately calculate your adjusted gross income (AGI) and then apply the appropriate tax brackets. South Carolina also allows for itemized deductions, which can further reduce your taxable income. Keep detailed records of all income and expenses throughout the year to ensure accurate filing. The South Carolina Department of Revenue offers resources and guidance for self-employed individuals, including information on estimated tax payments, which may be required if you anticipate owing more than $500 in state income tax. Filing deadlines generally align with the federal deadlines, but it’s always best to confirm the current year’s dates on the SCDOR website. Remember, proper tax planning and filing are essential to avoid potential issues with the state.

Top Tax Deductions for South Carolina Drivers

• Standard Mileage: The most popular and often simplest deduction. For the 2025 tax year, the standard mileage rate is 70 cents per mile. This rate covers wear and tear, gas, oil, and other vehicle-related expenses.
• Tolls & Parking: South Carolina drivers frequently encounter tolls on some highways and bridges. Keep receipts for all tolls and parking fees incurred while actively driving for Lyft, as these are deductible.
• Phone & Data Plan: If you use your phone for Lyft-related activities (navigation, accepting rides, etc.), you can deduct the percentage of your monthly bill that corresponds to business use.
• Vehicle-Related Costs: Expenses like car washes, phone mounts, dash cams, first-aid kits, and even hot bags for food deliveries (if you also drive for delivery services) are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil, repairs, insurance) in the same tax year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

This tax comprises 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 exceeding $400. This is a significant tax liability, so planning and setting aside funds throughout the year is highly recommended.

Resources: For more information on South Carolina state taxes, please visit the South Carolina Department of Revenue: https://www.sc.gov/dor/