Lyft Driver Taxes in Virginia - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Lyft Drivers in Virginia

Navigating the historic streets of Virginia as a Lyft driver offers flexibility, but also brings unique tax responsibilities. As an independent contractor, earnings from Lyft are considered self-employment income, requiring diligent record-keeping and accurate tax filing.

The IRS requires all Lyft drivers to report their income on Schedule C (Profit or Loss from Business) with Form 1040. Furthermore, earnings exceeding $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions. Failure to properly report income and pay these taxes can result in penalties and interest.

How Virginia Handles Gig Worker Taxes

As a resident of Virginia, a state income tax return is required, regardless of whether you are a full-time or part-time Lyft driver. Virginia operates on a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Virginia utilizes Form 540, the Individual Income Tax Return, as the primary form for self-employed individuals to report their earnings. Lyft income reported on your federal Schedule C will need to be transferred to your Virginia Form 540. Virginia also allows for deductions similar to the federal level, potentially reducing your state tax liability. It's important to note that Virginia does not offer a standard deduction equivalent to the federal level, so careful tracking of itemized deductions is crucial. Additionally, Virginia requires the payment of estimated taxes quarterly if your tax liability is expected to be $1,000 or more. Failing to pay estimated taxes can lead to underpayment penalties. Resources for Virginia tax information can be found on the Virginia Department of Taxation website: https://www.tax.virginia.gov/. Understanding these state-specific requirements is vital for compliant tax filing.

Top Tax Deductions for Virginia Drivers

• Standard Mileage: The most popular and often most beneficial deduction. The 2025 rate is 70 cents per mile. Given Virginia's diverse terrain and potential for significant mileage, this deduction can substantially reduce taxable income.
• Tolls & Parking: Virginia drivers frequently encounter tolls on I-95 and other major roadways. These tolls, along with any parking fees incurred while actively driving for Lyft, are deductible business expenses.
• Phone & Data Plan: The portion of your monthly phone and data plan used for Lyft driving is deductible. Keep detailed records of business usage to justify the deduction.
• Vehicle-Related Costs: Expenses like car washes, air fresheners, phone mounts, dash cams, and insulated food bags used for passenger comfort 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 larger 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. Lyft does not withhold these taxes, so it’s crucial to set aside funds throughout the year to cover this liability when filing your taxes.