Don't Miss How Much Money Do Lyft Drivers Earning?

AUBlog • 382 views • Publish 2021-07-10 • Update 2021-07-10

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Lyft has more than 1.4 million drivers by the end of 2019. If you’re thinking about adding to that number, you’re probably wondering, how much money do Lyft drivers make?

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On average, Lyft estimates that its own drivers make $18.83 per hour. However, since Lyft drivers aren’t salaried employees, you aren’t guaranteed to earn that much. In most markets, you’re not even guaranteed to make at least minimum wage since Lyft classifies its drivers as independent contractors, and minimum wage laws don’t apply.

Average Lyft Driver Earnings

 Full-Time Lyft Driver Earnings

Employment sites often collect salary information directly from employees to provide estimates to the public. According to Glassdoor.com, Lyft Drivers earn an average of $34,442 per year based on 106 salaries reported. Indeed.com reports slightly lower average yearly earnings of $28,997 based on 62 salaries reported. Another employment site, Salary.com, reports higher average annual earnings of $36,203 with a typical range of $30,103 to $44,203 per year.

The sites do not specify if this is before or after accounting for expenses.

Lyft Driver Hourly Earnings

In 2018, Lyft published its own median earnings estimate for Lyft drivers. Lyft’s estimate varies based on what you count as “working time.”

When a driver is online waiting for requests, driving toward a passenger, and driving a passenger:

  • Median earnings of $18.83/hour nationally
  • Median earnings of $21.08/hour in the top 25 markets

When a driver is driving toward a passenger and driving a passenger:

  • Median earnings of $29.47/hour nationally
  • Median earnings of $31.13/hour in the top 25 markets

Hourly earnings aren’t the same as net earnings. Lyft suggests estimating $3 to $5 per hour for expenses.

A popular rideshare website, therideshareguy.com, surveyed 60,000+ rideshare drivers in 2019, receiving 1,000 total responses. Surveyed Lyft drivers reported earning $17.50 per hour before expenses. This hourly wage includes time spent waiting for requests, picking up passengers, and driving passengers.

Lyft Driver Tips & Bonuses

Based on 106 salaries reported, Glassdoor found that Lyft drivers earn the following:

  • Average of $820 per year in bonuses with a reported range of $53 to $3,000
  • Average of $695 per year in tips with a reported range of $254 to $3,000

Of course, tips vary significantly. Drivers who offer amenities, treat passengers well, and drive well have an easier time earning tips. In 2019, a study from the National Bureau of Economic Research surveyed riders about their tipping habits. The study only surveyed Uber riders, but it’s likely a similar pattern extends to Lyft drivers as well since both companies allow riders to tip in cash or within the app. Data showed that around 60 percent of Uber riders never tip. Of those who do tip, the average tip is $3.

Ways Lyft Drivers Make Money

Now, let’s take a look at how Lyft drivers make money.

Fares

Lyft ride fare includes:

  • Base fare: the cost of getting into the car
  • Cost per mile: rate based on the city where the ride starts
  • Cost per minute: rate based on the region where the ride starts

The clock starts running one minute after you’ve confirmed your arrival to pick up the passenger or immediately after you tapped to pick in the app.

A rate card, which you can view in your driver account, shows the pay per minute and per mile based on the region or subregion you’re in. Large, busy cities tend to pay more per minute and per mile.

Tips

Riders can tip Lyft drivers in the app as a thank-you for excellent service or a clean car. Riders can also choose to give their driver a cash tip. Drivers always keep 100% of tips.

Bonuses & Promotions

Lyft offers different bonuses during busy times and in busy locations. Bonuses incentivize drivers to drive more in general or to drive more during a busy time.

At the beginning of the week, Lyft drivers can see scheduled bonuses in the app and plan their driving time accordingly. Bonuses are added to the app on Monday at 5 AM if any are available that week. Lyft also offers real-time bonuses that pop up in the app if there’s high demand.

Specific types of bonuses Lyft offers at different times include:

  • Personal Power Zones: a single-ride bonus that might appear when you’re in an area with more passengers than available drivers
  • Ride Streak: multiple-ride bonuses for accepting back-to-back rides during busy times like commute hours or holidays
  • Earnings Guarantee: a guarantee that you will earn a set amount for completing a certain number of rides in a given amount of time; details added to the app on Mondays
  • Ride Challenges: multiple-ride bonus when you complete a set number of rides within a given timeframe; appear in the app every Monday

Passenger Cancellation Fees

Lyft drivers earn a cancellation fee when the passenger cancels outside of the cancellation window. To earn the fee, the driver must be on their way to the pickup location and on track to arrive on time. How much you earn depends on the area. According to Ridester, the cancellation fee is usually $10, but drivers don’t receive the full $10.

Passenger No-Show Fees

Lyft drivers also earn a passenger no-show fee when they arrive at the pickup location and the passenger isn’t there. To qualify for a no-show fee, drivers must:

  • Tap to arrive at the pickup location in the app
  • Wait for the timer to countdown to 0:00 without leaving the pickup spot
  • Reach out to the passenger or respond if the passenger contacts you
  • Tap “Passenger is a no-show” and then “Confirm no-show” in the app

No-show fees vary by region.

How Much Does Lyft Take From Your Pay?

Lyft used to take a fixed percentage cut from each fare. Now, the company pays drivers a fixed per-mile and per-minute rate based on the area. How much Lyft takes per fare varies significantly. An analysis of 2018 rideshare data reported in Forbes showed an average take-rate of 27%. However, some drivers online claim that Lyft can earn as much as 40% of a passenger’s fees per ride.

As the driver, you’ll know ahead of time how much you can expect to make when you accept a ride. Plus, drivers keep 100% of tips and bonuses.

What Affects How Much You Can Earn by Driving for Lyft?

Lyft drivers don’t automatically make the estimated $18.83 per hour. How much you earn depends on the following:

How Many Miles You Drive

Lyft drivers earn a per-mile rate. The more miles you drive, the more you’ll earn.

How Many Minutes You Drive

Lyft drivers also earn a per-minute rate. The longer you drive, the more you’ll earn.

Where You’re Driving

Lyft publishes rate cards for every serviced region. Rate cards determine how much you get paid per mile and per minute. In general, drivers working in larger cities can expect to earn more per ride.

This is especially true for drivers in New York City and Seattle. In 2018, New York City passed ride-hail regulations that created a pay floor for drivers working for ridesharing companies, like Lyft and Uber. It requires rideshare companies to pay drivers at least minimum wage, which is set at $17.22 net per hour or $27.86 per hour before expenses.

In 2020, Seattle established a similar law that will take effect in 2021. Lyft must pay drivers at least $16.39 per hour.

When You’re Driving

Drivers who drive when promotions are active can earn bonuses that boost their pay. Lyft schedules some bonus periods at the start of the week, and others pop up in the app depending on rider demand and driver availability. Some riders plan their driving schedule around bonuses to increase their earnings. Drivers keep 100% of bonuses.

What Service Tier You Drive

Lyft offers luxury service tiers in select cities. Drivers with newer high-end cars who maintain a driver rating of at least 4.85 can work in the higher-paying tiers.

  • Lyft Lux: High-end vehicles with 3 seats
  • Lux Black: Premium black car service only for drivers with luxurious makes and models
  • Lux Black XL: Premium black SUV service for parties of up to 5 passengers

Drivers who participate in the Lyft Lux service tiers earn more than drivers who just give Lyft rides.

Tips

Drivers keep 100% of all tips, so tips play a big role in boosting your earnings. Drivers can increase tips by being more personable with passengers, offering in-car amenities, and being an excellent driver.

What are Some Common Expenses for Lyft Drivers?

Lyft drivers incur many expenses while driving, which aren’t reimbursed by Lyft. It’s estimated that driver expenses are $3 to $5 per hour. Lyft drivers must account for the following expenses when determining how much they’ll earn.

Vehicle Maintenance

Driving for Lyft puts more miles on your vehicle. You’ll need to change the oil, other fluids, and tires more often than if you only use your vehicle for personal use.

Car Payment

Lyft drivers who don’t own their car will need to account for their car lease or car loan payments. According to Experian, the average monthly payment for a new car loan is $568. The average monthly payment for a used car loan is $397.

Some full-time rideshare drivers rent cars weekly instead of using their personal vehicle because it’s more cost-effective for them.

Car Insurance

Lyft drivers must have a personal auto insurance policy that meets minimum state coverage requirements. Lyft also provides drivers with some coverage while they’re on the clock.

When you’re waiting for a ride, Lyft gives drivers third-party liability insurance for covered accidents. When you’re picking up or driving a passenger, Lyft provides third-party auto liability insurance, uninsured/underinsured motorist bodily injury insurance, and contingent comprehensive and collision insurance up to the actual cash value of the car with a $2,500 deductible. See the details here.

Some drivers decide to purchase rideshare insurance, which can fill the gaps between your personal policy and the coverage provided by Lyft, especially since Lyft has a high deductible. Speak with your current car insurance provider to see if you need a rideshare insurance policy or rideshare endorsement.

The cost varies significantly. You can find quotes as low as an extra $15 to $20 per year on top of your personal auto insurance policy or as high as 20% more than your personal policy. Rideshare insurance policies are often tax-deductible.

Gas

Lyft drivers are not reimbursed for gas expenses. Drivers can either claim gas expenses by using the standard mileage deduction or by deducting the actual cost of gas. This lowers your taxable income, but it doesn’t put the money spent on gas back in your pocket.

In-Car Amenities

Some Lyft drivers offer in-car amenities like phone chargers to use, water bottles, tissues, hand sanitizer, mints, etc. You don’t have to offer amenities, but offering a good rider experience can help boost your ratings and tips.

Drivers can claim in-car amenities as a business expense outside of the standard mileage deduction.

Health Insurance

Lyft doesn’t offer health insurance to its part-time or full-time drivers. If you want health insurance, you’ll need to purchase your own plan. Lyft drivers can use the website, Stride Health, to find an affordable plan, but Lyft doesn’t contribute to the cost. Drivers can also shop around for health insurance.

According to Stride Health, the average Stride Health member, which includes Lyft drivers, pays $150 per month for health insurance.

What Taxes Do Lyft Drivers Need to Pay?

Most Lyft drivers need to pay quarterly estimated taxes and self-employment taxes. For specific tax advice about becoming a Lyft driver, consult a tax professional in your area.

Quarterly Estimated Tax Payments

Lyft doesn’t withhold taxes from your pay like a regular employer because as a Lyft driver, you’re an independent contractor. You’re responsible for tracking your income, your expenses, and your federal, state, and local tax liability. This includes making quarterly tax payments or estimated tax payments. Whether you must pay quarterly estimated tax payments depend on how much you expect to earn during the year.

Thankfully, you won’t have to pay taxes on everything you withdraw from your Lyft account. Lyft drivers can claim all of their business expenses to reduce their overall taxable income. You can take the standard mileage deduction, which in 2020, is 57.5 cents, or claim the actual amount spent.

If you choose to claim the actual cost of being a Lyft driver, you can deduct the cost of gas, repairs, depreciation, lease expenses, and other car-related expenses. Drivers can also claim in-car amenities made available to riders—like water bottles or a tablet used exclusively for rider entertainment—on top of the standard mileage deduction.

Self-Employment Taxes

Lyft drivers also need to pay self-employment taxes, which consist of your Social Security and Medicare taxes. For traditional employees, the employer pays half of the tax liability. Independent contractors must pay the full amount, which equals 15.3%. You can deduct the employer portion (7.65%) from your taxes.

Is Becoming a Lyft Driver Worth It?

Driving for Lyft comes with many perks you won’t get with a traditional 9 to 5 job. Lyft drivers can work whenever they want to, which can make taking time off and spending time with family easier. Many drivers enjoy the freedom of being their own boss and meeting new people too.

The main downside of driving for Lyft is that drivers only earn money for hours spent working with no benefits like paid time off, health insurance, matching retirement contributions, or paid sick days. Plus, drivers incur many expenses like gas, rideshare insurance, and car maintenance.

Since Lyft earnings vary significantly based on where you live and what expenses you’ll incur, do the following before signing up:

  • Research average Lyft earnings and rates in your area; Sites like Reddit or rideshare forums can help

Estimate your per-mile or per-hour expenses

  • Talk to a tax professional about Lyft driver tax deductions and self-employment taxes
  • Research the cost of health insurance and other benefits you want
  • Compare your estimated earnings to what you could make from another job or side hustle

For many Lyft drivers, the flexibility that comes along with driving for Lyft outweighs the potential downsides and makes the pay worth it.