Turo Host Taxes in Texas - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Turo Hosts in Texas

Turning your vehicle into a revenue stream through Turo is a popular way to capitalize on Texas’s thriving tourism and transportation needs. However, alongside the earnings comes the responsibility of accurate tax reporting. As a Turo host in Texas, understanding your federal and state tax obligations is crucial for a smooth tax season.

The IRS requires all Turo hosts to report income earned on Schedule C (Profit or Loss from Business) as self-employment income. This means not only income tax but also self-employment tax, which covers Social Security and Medicare contributions, will be due on net earnings exceeding $400.

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 operating a Turo business, it's a key part of the state's business tax structure. Generally, Turo income is treated as business income, and Texas doesn’t have a specific tax form for gig economy earnings beyond the standard business tax considerations. It’s important to maintain accurate records of all income and expenses, even in the absence of a state income tax, as this documentation will be necessary if your business grows and potentially becomes subject to the Franchise Tax. Furthermore, while Texas doesn’t levy a state income tax, the federal requirements still apply, and diligent record-keeping is paramount. Remember to consider potential sales tax implications if you are renting vehicles frequently and generating substantial revenue. Consulting with a qualified tax professional familiar with Texas business taxes is always recommended to ensure full compliance. For more information on Texas taxes, visit the Texas Comptroller of Public Accounts website.

Top Tax Deductions for Texas Drivers

• Standard Mileage: The #1 deduction. The 2025 rate is 70 cents/mile. With Texas boasting relatively lower gas prices compared to many states, the standard mileage rate often provides a significant tax benefit for Turo hosts, simplifying expense tracking.
• Tolls & Parking: Texas has extensive toll road systems like TxTag. Keep detailed records of all toll expenses and parking fees incurred while your vehicle is being used for Turo rentals.
• Phone & Data Plan: If you use your phone for Turo-related communication, scheduling, or managing your listings, you can deduct the percentage of your phone and data plan that corresponds to business use.
• Vehicle-Related Costs: Don't overlook smaller expenses! Items like car cleaning supplies, phone mounts for renters, air fresheners, or even hot bags for delivery services (if applicable) are all potentially deductible 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 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 Turo host, you are responsible for paying both the employer and employee portions. Platforms like Turo do not withhold these taxes, so it’s essential to plan for this expense when filing your federal taxes.