Lyft Driver Taxes: Complete 2026 Tax Guide

1. Mileage Deduction (Biggest Tax Saver)

The standard mileage rate for 2026 is 67 cents per mile. This covers all business miles, including driving while waiting for ride requests, driving to pick up passengers, and driving passengers to their destinations. Most Lyft drivers drive 15,000-25,000 business miles per year.

Example: If you drive 20,000 miles for Lyft in a year, that's a $13,400 deduction (20,000 $0.67). At a 25% tax rate, this saves you $3,350 in taxes.

What counts as business mileage:

• Miles driven while the Lyft app is on (even without passengers)
• Driving to pick up passengers
• Driving passengers to their destinations
• Driving between drop-off and next pickup
• Driving to a busier area to find rides

What doesn't count: Your commute from home to where you start driving for Lyft, and personal errands during your shift.

2. Phone and Data Plan

Deduct the business portion of your phone bill and data plan. If you use your phone 80% for Lyft (accepting rides, navigation, communicating with passengers), you can deduct 80% of your monthly phone costs.

Typical savings: $600-$1,000 per year for most drivers. Keep phone bills and calculate the business-use percentage based on actual usage. This is one of the most overlooked deductions for rideshare drivers.

3. Car Washes and Cleaning

Keep your car clean for passengers? Deduct car washes, interior cleaning, detailing costs, and cleaning supplies. Lyft requires drivers to maintain clean vehicles, making these legitimate business expenses. Even if you use the standard mileage deduction, car washes are separately deductible.

4. Tolls and Parking Fees

Deduct tolls paid while driving for Lyft and parking fees incurred during rides. Keep receipts or use apps that automatically track these expenses. Note: Parking tickets and traffic violations are NOT deductible.

5. Passenger Amenities

Water bottles, mints, gum, tissues, phone chargers, and other items you provide to passengers are deductible business expenses. Many Lyft drivers provide these amenities to improve ratings and earn better tipsall fully deductible.

6. Vehicle Accessories and Supplies

Deduct the cost of items purchased specifically for Lyft driving:

• Phone mount or holder
• Dash cam for security
• Seat covers and floor mats
• Air fresheners
• USB charging cables
• Emergency kit
• Lyft Amp (light-up beacon)

7. Roadside Assistance and Insurance

AAA memberships, roadside assistance plans, and commercial rideshare insurance add-ons (required by many insurance companies for Lyft drivers) are deductible. Note: Your regular personal auto insurance is only partially deductible based on business-use percentage.

?? Drive for Both Lyft and Uber

Many drivers work for both platforms to maximize earnings. From a tax perspective, combine all income and expenses on a single Schedule C. Track mileage and expenses separately by platform for better business insights. Check out our Uber driver tax guide for comparison.

?? Track All Miles While App is On

Don't just track miles with passengerstrack ALL miles while your Lyft app is on and you're available for rides. This includes time spent waiting in parking lots, driving to busier areas, and positioning yourself for better ride requests. These miles are fully deductible.

?? Consider a Separate Business Bank Account

While not required, having a separate checking account or credit card for Lyft expenses makes record-keeping much easier and provides clear documentation in case of an audit. Many banks offer free business checking accounts for sole proprietors.

?? Maximize Your Deductions in Year One

If you're starting Lyft driving, consider purchasing necessary equipment (phone mount, dash cam, seat covers) before year-end to maximize first-year deductions. You can also prepay expenses like annual roadside assistance memberships to increase current-year deductions.