Lyft Drivers: How Much Money Can They Really Make in the United States?
How much do Lyft drivers make is a very common question. Lyft and Uber are the newest ways for people to earn extra cash in their spare time, and they do this by providing taxi services to the public and giving people rides where they need to go. In both instances, the drivers use their own cars and get paid via an app that can be downloaded to their phones. Although most of these drivers claim to make “good money” doing what they do, what does that mean in practical terms? What exactly is “good” money, and how much does a Lyft driver make in the real world?
Although more than half of these drivers work less than 15 hours per week, only about 20% of Uber and Lyft drivers work 35 hours a week or more. Nevertheless, on the website GlassDoor, self-reported earnings from drivers averaged $15 per hour for Lyft drivers and $14 per hour for Uber drivers. Of course, these are just averages, so when you consider that the average earnings per ride are going to be different in New York City and Los Angeles than it is in Louisville or Nashville, it’s best to break these amounts down even further to determine what these drivers really make.
First of all, Lyft drivers are independent contractors and do not get paid a minimum wage or even an hourly wage. They get paid a percentage of the cost of that particular ride, and that, of course, depends on the length of the ride and where you’re bringing the passenger. In times when there are extra-high demands from riders, Lyft will offer their drivers an earnings guarantee incentive, but as a general rule, drivers only get a percentage of the cost of the ride plus tips, and since the percentage can be fairly high, drivers can still make some decent money for each ride they provide.
Lyft looks at the work period of their drivers as being divided into three sections, which include:
- Period 1: Driver signs into a downloaded app on his or her phone.
- Period 2: Driver accepts a ride request from a passenger.
- Period 3: Driver drives the passenger to his or her destination.
Lyft drivers can sign on and off of this app any time they want to, which means they can work when they please. They don’t have to let the Lyft executives know when they plan to work or give them a schedule of any type. When they’re ready to work, they simply sign into the app and let the app know they’re ready to work, which makes their particular vehicle available to prospective riders.
Naturally, a lot of what you make per hour with Lyft depends on how long you stay in Periods 1 and 2 mentioned above, because when you make yourself available, you don’t automatically get a ride request at that instant. Some days you may wait quite awhile for a rider to contact you, while other days you are constantly giving rides to people with very little, if any, downtime, in between rides. Nevertheless, Lyft keeps official records of all of their drivers’ earnings, and their per-hour earnings for the typical driver look like this:
- $18.83/hour (national average)
- $21.08/hour (top 25 markets)
If you look at the average earnings when drivers have back-to-back ride requests, that is, when Periods 1 and 2 have no downtime, the average hourly salaries naturally go up, looking like these numbers below:
- $29.47/hour (national average)
- $31.18/hour (top 25 markets)
The Fares Charged by Lyft
Essentially, when it comes to what Lyft charges its riders, there is a base fare, which is what the app charges the rider when the ride is scheduled; the cost per minute, which starts after the driver taps to arrive; and the cost per mile, which can vary depending on your city and your region. Occasionally, your ride fare includes a 25% prime time fee added on, which happens when there is a shortage of drivers or during super-busy ride times – for instance, when it’s 5:00 p.m. on a weekday and people are calling in to get rides home from work.
The fees received by the driver vary depending on where they live. Naturally, bigger cities will pay more per mile than smaller towns, but you have to remember that your expenses will be higher in those cities as well, so you need to make a little more money to offset the extra expenses. When you receive your pay, Lyft will automatically take 20% to 25% of that as their commission. The rest, however, is yours, including 100% of the tips you are paid.
Lyft also does something that Uber doesn’t do – they include a calculator on their website that allows you to estimate how much money you can make in your particular city. If you’d like to compare rates in various cities, consider the amounts below, which show what a typical Lyft driver makes in these cities driving a total of seven hours per week:
- Boston, MA: up to $168 per week ($24/hour)
- Chicago, IL: up to $168 per week ($24/hour)
- Dallas, TX: up to $140 per week ($20/hour)
- Denver, CO: up to $140 per week ($20/hour)
- Minneapolis, MN: up to $161 per week ($23/hour)
- Nashville, TN: up to $140 per week ($20/hour)
- New York, NY: up to $196 per week ($28/hour)
- Portland, ME: up to $140 per week ($20/hour)
- San Francisco, CA: up to $189 per week ($27/hour)
- Seattle, WA: up to $161 per week ($23/hour)
- St. Louis, MO: up to $140 per week ($20/hour)
Let’s Take a Look at Expenses
Naturally, you have to take expenses into consideration when you drive for Uber or Lyft. With both of these companies, you are an independent contractor and therefore, you are responsible for all of the costs associated with the operation of your vehicle. You are, in essence, a business when you think about it, and these expenses are 100% your responsibility. They can include the following costs:
- Car insurance
- Tolls, license, and permit fees
- Vehicle upkeep and maintenance
If you would like an estimate of how much these things will cost you, it’s a good idea to speak with an insurance agent because you’ll often need to add additional coverage when you’re driving for a ride-sharing company, and a good agent will let you know how much extra all of this is going to cost you. If you decide to work for Lyft or Uber, it is a good idea to buy a notebook and keep track of every expense associated with driving your car.
Ask a professional accountant how much you can deduct each year because you’re using your vehicle for a business, and keep track of everything in exact amounts so that filing your income taxes is a lot easier. The amount you’ll get to subtract off of your taxes is usually a percentage, which is why you need to keep an exact count down to the penny of every expense involved in your day-to-day activities. Neat record-keeping is a must when you’re a driver for Lyft or Uber. If you don’t keep good records, you’re the one who will be hurt the most by it.
Speaking of Expenses …
Although there are expenses associated with being a Lyft driver, you also get certain benefits at tax time because you’re an independent contractor. If you decide to drive for Lyft, even on a part-time basis, you should be aware of the tax deductions you get when you file your taxes every April 15. This is one of the main reasons why keeping excellent records of all of your expenses is so important. When you’re doing this, keep in mind that you can deduct the following expenses each year when you do your taxes:
- Cell phone bill. You’ll receive your jobs via your cellphone and therefore, you can deduct a portion of your cell phone bill as an expense on your income tax. Keep the monthly statements that you get from the cell phone company, then match them up against the days you worked to determine how much you can deduct.
- Deduction for mileage. Keeping track of your mileage is easy – just keep a clipboard in the car and write down your beginning and ending mileage for each ride you provide. In 2019, you could deduct 58ȼ per mile on your income taxes. Each year it goes up, so you’ll be able to deduct more than that amount now.
- Expenses associated with your vehicle. If you have a car note, part of that note can be deducted as an expense on your income taxes. You can take a portion of other expenses as well, including your insurance, title, license, and registration fees. Check with your accountant to see what the exact percentage is.
- Food, drinks, or other expenses you provide for the passenger. You can’t deduct what you consume yourself, and it is unlikely these expenses will come up frequently, but if you do have to provide consumables to the passenger during your ride, keep the receipts because these expenses are also deductible.
- Ridesharing commissions. Since Lyft takes a commission from each ride fare and keeps it for themselves, you can actually deduct this amount if you like, but talk to an accountant first to determine whether it is worth your while to do so. Their commission is technically a part of your commission and can be deducted as an expense, but only an accountant can tell you exactly how to do it.
- Tolls and parking costs. If you have to cross a toll road or pay a parking fee when driving your customer to his or her destination, write it down in your notebook or on your mileage chart, and make sure you keep the receipt somewhere safe – such as your glove compartment or attached to the clipboard.
If you’re trying to determine how much do Lyft drivers make, you have to take into consideration all of your expenses as well as your income, and even though the above expenses can be deducted from your income taxes, they are still expenses you’ll have to contend with throughout the year.
One more thing – an independent contractor receives a 1099 tax form at the end of the year with the total amount they’ve earned, but 1099 forms do not show taxes because nothing is taken out of the amount you receive – no state or federal taxes, Social Security, and so on. The 1099 has to be given to you if you make $600 or more in a given tax year. This means you’re responsible for paying these taxes yourself come tax time, which is yet another expense you need to consider when you’re trying to calculate how much money you might make being a driver for Lyft.
More About Potential Income
Again, your income with Lyft will vary depending on many factors, but if you’d like to learn how many drivers make a certain amount of money, the chart below can help. It shows the different average income levels earned by Lyft drivers, and what percentage of the drivers earned which average.
- 32% of Lyft drivers earned $0 to $99 per month
- 48% of Lyft drivers earned $100 to $499 per month
- 13% of Lyft drivers earned $500 to $999 per month
- 5% of Lyft drivers earned $1000 to $1499 per month
- 3% of Lyft drivers earned $1500 to $1999 per month
- 1% of Lyft drivers earned $2000 or more per month
Of course, you should also keep in mind that the majority of Lyft drivers are part-time drivers that work less than 35 hours per week, so when you think of it this way, these amounts are really not that bad.
So, if you really want to make some good part-time money driving for Lyft, you can certainly do so. First, though, you have to be willing to put in the time and get out there and drive. If you choose “rush” hours when people need rides to and from work, or if you’re a night owl and don’t mind driving people home from bars on Friday and Saturday nights, you can make even better money. In fact, one driver on GlassDoor testified that he makes around $800 per week simply working late at night on the weekends.
In addition to this tip, here are a few other suggestions for increasing your income each time you drive with Lyft:
- Be polite and friendly. Although not all riders want to talk with the driver, many of them do, and the more you develop a rapport with them, the more likely they’ll leave you a big tip once the ride is over.
- Look for communications from Lyft so you’ll know when these “prime time” hours are, which enable you to get at least 25% more than you would otherwise.
- Pay attention to areas around town that seem to have a bigger demand for rides than others. Each city has areas that seem to stay busier than others. Areas around commercial areas and around universities or colleges are usually very busy, so try to learn where those areas are and take advantage of them.
- Watch for bonuses offered by Lyft. For instance, Lyft offers bonuses when you first sign up for completing a certain number of rides within a certain timeframe. They also give other types of bonuses throughout the year, so make sure you pay attention to the emails and texts they send you on a seemingly regular basis.
Essentially, driving for Lyft is just like having any other part-time or even a full-time job. In other words, what you get out of it depends entirely on what you put into it. If you’re willing to learn how to make the most money from the job, the areas of town that seem to have the most ride requests, and make up your mind to drive when prime time is here and during rush hour, you’ll naturally have more opportunities to make a lot of money. In other words, if you treat being a Lyft driver like a real business and devote time to it on a regular basis, that average of $15 per hour or even more is very possible.
There are, in fact, many advantages to being a Lyft driver besides the money. You can work when you want, you know upfront how much money you’ll be making per ride, and you get your pay deposited directly into your checking account. In fact, although Lyft pays its drivers weekly, they also have a plan where you can get paid instantly if you like, so make sure you check out this option if you ever decide to drive for them, besides reading about how much do Lyft drivers make.
When it comes to making extra money on the side, driving for Lyft definitely beats flipping burgers in more ways than one. If you love meeting new people, love to drive, and have just a few hours to spare each week, becoming a Lyft driver is a great way to combine those things to make some extra cash on the side. You can even sign up online and be driving in no time. The people at Lyft make it super easy for you to get started, and they do everything they can to make sure you’re a success in the end. We hope this article helped you find out how much do Lyft drivers make!