Instacart Shopper Taxes in Alabama - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Alabama?

Yes, absolutely. Income earned as an Instacart shopper is taxable at both the federal and Alabama state levels. Because Instacart treats you as an independent contractor, not an employee, you are considered self-employed by the IRS and the state of Alabama.

Federal Requirements: You'll report your Instacart earnings on Schedule C (Profit or Loss from Business) when you file your federal income tax return (Form 1040). This form allows you to deduct business expenses, ultimately determining your net profit (or loss). It's crucial to keep accurate records of all income and expenses.

Alabama Requirements: Alabama has a graduated income tax system, meaning the tax rate increases as your income increases. Your net profit from Schedule C will be added to your other income (like wages from a traditional job, if any) and taxed according to the Alabama income tax brackets for the 2024 tax year. You'll use Form A-4 to calculate your Alabama income tax liability. The Alabama Department of Revenue website (revenue.alabama.gov) will have the most up-to-date brackets and forms.

Top Tax Write-offs for Instacart Shoppers

As a self-employed Instacart shopper, you can significantly reduce your tax burden by claiming eligible business deductions. Here are some key write-offs:

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per mile for business use. Keep a detailed mileage log (date, destination, business purpose, miles driven). You can use apps to help with this.
• Hot Bags & Shopping Equipment: The cost of insulated bags, shopping carts, phone mounts, or any other equipment specifically used for Instacart shopping is deductible.
• Smartphone & Data Plan (Partial): If you use your smartphone and data plan for Instacart, you can deduct the percentage of the expense attributable to business use. For example, if you use your phone 75% for Instacart, you can deduct 75% of the phone bill.
• Instacart Software/App Fees: Any fees Instacart charges you directly (beyond the commission taken from your earnings) may be deductible. Keep records of these fees.

The 15.3% Self-Employment Tax Surprise

Many independent contractors are surprised by self-employment tax. When you're an employee, your employer pays half of your Social Security and Medicare taxes. As a self-employed individual, you're responsible for both the employer and employee portions – a total of 15.3%. This is calculated on Schedule SE (Self-Employment Tax). However, you only pay self-employment tax on profits over $400. The good news is you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which reduces your overall income tax liability.

Closing Tip for Alabama Residents

Tax laws can be complex, and it's easy to miss deductions. I strongly recommend keeping meticulous records of all your Instacart income and expenses throughout the year. Consider using accounting software designed for freelancers or consulting with a qualified tax professional (like myself!) to ensure you're maximizing your deductions and complying with both federal and Alabama tax laws. Don't wait until the last minute – proactive tax planning can save you money and stress. Good luck, and happy shopping!