How Much Do Lyft Drivers Make?

Driving for a ride-hailing app is one way to earn money while keeping the hours you choose. Driving for Lyft seems like an attractive prospect, however, the most important question to answer is how much do Lyft drivers make compared to how much Uber pays. Read on to learn more about Lyft’s earning structure.

What Is Lyft?

Lyft is a ride-hailing app. It is similar to a cab service except users and drivers connect via a smartphone app. This makes ride-hailing a more convenient experience for people wanting a ride. 

Average Income for Lyft Drivers

The amount of money that Lyft drivers earn varies widely based on several different factors. 

Various sources show different results. Indeed reports an average income of $24,895. On the other hand, Glassdoor reports an average of about $35,360.

Keep in mind these amounts must also cover the costs associated with the job, such as vehicle operating expenses, auto loan repayments, and insurance. If you fall short you can also consider loans for Lyft drivers.

Understanding How Lyft Drivers are Paid

The legal structure of Lyft and other ride-hailing companies is such that Lyft drivers are not employees of Lyft. Instead, they are classed as independent contractors. 

This means that as a Lyft driver you do not have the right to healthcare coverage, 401(k) contributions, or other employee benefits. You just receive your share of the ride revenue. If you’re wondering “Can H1B visa holders drive for Lyft and Uber?” you can read more here.

How Your Pay Works

One of the most important considerations for you when working as a Lyft driver is the fact that you are not an employee of Lyft. 

This means you are not protected by federal minimum wage regulations. In other words, there is no legal limit to how little you can earn per hour as a Lyft driver.

Lyft Driver Earnings Breakdown

Your pay as a Lyft driver can be broken down into contributions from four things: time, distance, tips, and bonuses. Each of these is explained below.

• Time: When there is a customer in your vehicle you get paid a per-minute rate for every minute that the trip lasts. This means even if you are stuck in traffic and not getting any distance you are still earning a time rate.
• Distance: Just like traditional cabs, you also earn a per-mile rate, which varies by city, for every mile of the trip between when you pick up and drop off a rider
• Tips: If a customer is very impressed by your service, they can leave a tip. You keep 100% of the tip value.
• Bonuses: Bonuses are offered by Lyft to drivers in areas and at times when demand is highest. Some bonuses are scheduled but others come and go in real-time. The amount you can earn from bonuses varies.

What Determines Lyft Earnings?

It is important to understand what factors affect the amount of money you can expect to earn as a Lyft driver. A few of the factors affecting how much do Lyft drivers make are outlined below.

Location

Lyft changes the amount that riders pay depending on the departure and destination location.

As a driver, these changes affect the amount of money you earn from completing a trip. The amount you earn can change based on zone-based bonuses at certain times of the day.

Surge Pricing

Surge pricing is when the app dramatically increases the price of a ride in areas and at times when a lot of people want a ride at the same time but there are not enough Lyft drivers available for everyone. 

Part of the increased prices during surges are used to offer bonuses for drivers working at that time in that area.

Promotions and Bonuses

Lyft offers several kinds of driver bonuses under certain circumstances :

• Scheduled: Scheduled bonuses are announced in the app at the beginning of the week, allowing you to plan the best time and location to work. 
• Real-time: These kinds of bonuses appear in the app if there is high demand near the area you are working in.
• Ride streak: You earn this kind of bonus for accepting one ride after another back to back without a break during times of very high demand.
• Earning Guarantees: If you get this bonus, then once you reach the set number of completed rides, you are guaranteed to earn a certain amount in total, regardless of how long each trip was.
• Ride Challenges: You earn the ride challenge bonus by completing a set number of rides within the given time limit.

Income Taxes for Lyft Drivers

Employees do not have to organize and pay income tax themselves. It is automatically deducted from their paycheck every month.

However, an independent contractor is legally viewed as someone operating a small business. You must pay the income tax on the pay that you receive from Lyft to the IRS (Internal Revenue Service) yourself. 

The income tax rate for employees is different from the rate for an independent contractor. There is also a self-employment tax that you must pay if you make more than $400 in a calendar year.

In all, you pay about 7.65% more in federal taxes as an independent contractor than if you were an employee. However, this does not necessarily mean you will pay a larger amount of money. 

You can deduct the expenses you have from doing the job (cellphone bill, tolls, snacks for customers, mileage) from your taxable income and reduce your tax bill.

As a Lyft driver, it is important to understand state and federal tax issues. If you fail to file your taxes correctly, you may end up liable for back taxes and penalties from the IRS, or state tax agencies.

Tips for Earning More as a Lyft Driver

The key to maximizing your earnings as a Lyft driver is to understand all the factors that change earnings and use them to your advantage. 

Maximize Earnings by Driving More

The amount of time you spend driving is the only factor that you have direct control over. The more time you spend working, the more you earn. Since you do not get paid anything while waiting for customers, the key is to maximize the time you spend driving with a paying customer. 

That means it is best to maximize your hours at times and in places where there is a lot of demand.

Keep in mind there is a limit to how many hours you can drive per week. Driving while tired is extremely dangerous. Always make sure you are well rested whenever you are driving.

Tools for Prediction Rider Demand

If you maximize your working hours only when rider demand is highest then you will make the most money.

There are a few tools in the Lyft app that you can use to try and predict rider demand in your city at a given point in time. You can use the real-time demand map to guide you to areas with the highest demand at a given time during your working hours. 

You can also use the demand forecasts, which are based on historical patterns, to choose the best days and times of day for you to work to benefit from high rider demand.

Drive with a Plan

Use the available tools to plan so that your work hours overlap as much as possible with times of high demand. Check scheduled bonuses and use them to decide the best times to drive.

Frequently Asked Questions (FAQ)

How much can a Lyft driver typically earn?

The earnings of a Lyft driver can vary widely based on several factors, including location, hours worked, and demand. On average, drivers may earn anywhere from $15 to $25 per hour before expenses in many cities.

Do Lyft drivers make more in certain cities?

Yes, earnings for Lyft drivers can be higher in larger cities or areas with higher demand for rideshare services. Cities like New York, San Francisco, and Los Angeles often have higher earning potentials.

How do expenses affect a Lyft driver’s earnings?

Expenses such as fuel, vehicle maintenance, insurance, and depreciation can significantly impact a Lyft driver’s net earnings. These expenses vary depending on the vehicle and how much the driver works.

Can Lyft drivers earn tips?

Yes, Lyft drivers can earn tips. Passengers have the option to tip drivers through the Lyft app after the completion of each ride, and drivers keep 100% of their tips.

Is there a difference in earnings between part-time and full-time Lyft drivers?

Yes, full-time Lyft drivers who work peak hours and more days per week generally have the potential to earn more than part-time drivers. However, increased hours also lead to higher operating expenses.

How does surge pricing affect Lyft driver earnings?

During periods of high demand, Lyft may implement surge pricing, which increases fare rates. Driving during surge pricing can significantly increase earnings.

Do Lyft drivers get paid for wait time?

Lyft drivers get paid a minimal amount for wait time if they have to wait for the passenger for a certain period after arriving at the pickup location.

Are earnings from Lyft affected by the type of vehicle?

Yes, drivers with higher-end or larger vehicles that qualify for Lyft Lux or Lyft XL can earn higher fares per ride compared to standard Lyft rides.

How often do Lyft drivers get paid?

Lyft drivers can opt for weekly automatic deposits. Additionally, Lyft offers an ‘Express Pay’ feature, allowing drivers to cash out their earnings instantly for a small fee.

Does Lyft provide any bonuses or incentives for drivers?

Lyft occasionally offers bonuses and incentives for drivers, such as extra earnings for completing a certain number of rides within a specified time frame.

Read More

• How Much Does Uber Pay?
• What is Unearned Income?
• White Collar vs. Blue Collar: What’s the Difference?
• Can I Drive Uber on F1 Visa?
• How to Calculate Net Income

Final Thoughts

The question of how much do Lyft drivers make does not have a simple answer. The answer varies widely depending on several factors, including location and customer demand. There are strategies you can use as a driver to maximize your earnings. The best strategy is to drive for long hours only when demand is high.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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