Lyft Driver Taxes in Dallas, Texas - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Dallas, Texas

Navigating the bustling streets of Dallas as a Lyft driver offers flexibility, but it also comes with tax responsibilities. Successfully managing these obligations is crucial for avoiding penalties and maximizing returns.

As an independent contractor, income earned through Lyft is reported to the IRS on Schedule C (Profit or Loss from Business). This means drivers are considered self-employed and responsible for paying both income tax and self-employment tax – covering Social Security and Medicare – on net earnings exceeding $400. Accurate record-keeping throughout the year is paramount.

How Texas Handles Gig Worker Taxes

The big perk in the Lone Star State is no personal income tax. However, be aware of the Texas Franchise Tax. While it has a high threshold (over $1.2 million) that rarely applies to solo gig workers, it's a key part of the state's business tax structure. Lyft drivers operating in Dallas should understand that while there's no state income tax to worry about, maintaining accurate records of business expenses is still vital for federal tax purposes. Consider the impact of driving in a large city like Dallas; parking costs, even short stops to pick up passengers, can add up. Furthermore, understanding local ordinances regarding ride-sharing operations within Dallas County is important, though these generally don't directly impact state tax liability. Texas does not have a specific classification for "gig workers" beyond standard self-employment. The Texas Comptroller of Public Accounts provides comprehensive information on business taxes and regulations. It's always best to consult their resources for the most up-to-date information: Texas Comptroller. Remember, even without state income tax, proper federal tax compliance is essential.

Top Tax Deductions for Dallas, Texas Drivers

• Standard Mileage: The #1 deduction. The 2025 rate is 70 cents/mile. With relatively lower gas prices in Texas compared to states like California, the standard mileage rate is often the most advantageous method for Dallas Lyft drivers.
• Tolls & Parking: Dallas drivers frequently encounter tolls on roads like the Dallas North Tollway and the George Bush Turnpike. Keep meticulous records of all toll expenses, as these are fully deductible. Parking fees incurred while waiting for or picking up passengers are also deductible.
• Phone & Data Plan: The percentage of your phone and data plan used for Lyft driving is deductible. If you use your phone 70% for work, you can deduct 70% of the bill.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts, dash cams, and even supplies like hand sanitizer or hot bags for food delivery (if also doing that) 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

The 15.3% self-employment 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. Platforms like Lyft do not withhold these taxes, so it’s crucial to plan for this liability throughout the year, potentially making estimated tax payments quarterly to avoid penalties.