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Do Uber and Lyft Drivers Pay State Business Taxes?

Do Uber and Lyft Drivers Pay State Business Taxes?

After talking with some drivers about taxes, some asked if they had to pay state business taxes. This was something I haven’t really looked into before as in Massachusetts, there isn’t any kind of tax on small business and S-corporations below a certain threshold. I know that California has a franchise tax but I wasn’t sure about the other states. I spoke with a few CPAs and done some research on various business tax laws around the country. Some cities have their own taxes so watch for those as well. This post will only cover state taxes but make sure that there are no county or city taxes on your business.

It was really interesting to see how each state view business entities. There are a few states that don’t recognize S-corporations at all, while some allow the pass-through income for S-corporations but levies a tax on all LLC.

Here are the common business classifications for rideshare drivers:

In most cases, you will not need to pay state business taxes. In most cases, your Lyft and Uber income will flow through your entity (whether it is a sole proprietorship, LLC or S-Corp) and it will show up as personal income.

Here are the states that need some kind of business tax:

I have a much more comprehensive list of the different tax laws by state in our Comprehensive Rideshare Taxes Course in addition to other tax related material so go on over and check it out!

Have more questions about Uber or Lyft? Head on over to our Rideshare Driver Training Course! Driver Promotions
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