Instacart Shopper Taxes in Arizona - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Arizona?

Yes, absolutely. Income earned as an Instacart shopper is taxable at both the federal and Arizona state levels. As an independent contractor, Instacart doesn't withhold taxes from your payments. This means you're responsible for paying both income tax and self-employment tax on your earnings.

Federal Taxes: You'll report your Instacart income on Schedule C (Profit or Loss from Business) as part of your Form 1040. Schedule C allows you to deduct business expenses (more on that below!), reducing your taxable income. The net profit (income minus expenses) from Schedule C is then reported on your Form 1040.

Arizona State Taxes: Arizona has a flat income tax rate. For 2024, the rate is 2.5%. You'll report your federal adjusted gross income (AGI) on your Arizona state income tax return (Form 140) and calculate your Arizona tax liability based on that AGI and the 2.5% rate. Any deductions you take on your federal return will generally flow through to your Arizona return as well.

Top Tax Write-offs for Instacart Shoppers

Don't leave money on the table! Here are some common deductions Instacart shoppers in Arizona can take:

• Mileage: This is a big one! The 2024 federal standard mileage rate is 67 cents per mile for business use of your vehicle. Keep a detailed log of all miles driven for Instacart deliveries (from leaving home to returning home, including trips to the store and customer). You can use apps to track this automatically.
• Smartphone & Data Plan: If you use your smartphone for Instacart (and most shoppers do!), you can deduct the portion of your phone bill and data plan that relates to your work. If you use your phone 50% for Instacart, you can deduct 50% of the costs.
• Hot Bags & Shopping Equipment: The cost of insulated bags, carts, or any other equipment you purchase specifically for Instacart shopping is deductible.
• Instacart Shopper App Fees/Software: Any fees Instacart charges you directly, or the cost of any tax software you use to prepare your taxes as a self-employed individual, are deductible business expenses.

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%.

You'll calculate this tax on Schedule SE (Self-Employment Tax). The good news is you only pay self-employment tax on your net profit (after deducting business expenses on Schedule C). Also, you don't pay self-employment tax on any earnings below $400. You can also deduct one-half of your self-employment tax from your gross income on Form 1040.

Closing Tip for Arizona Residents

Tax laws can be complex, and this is a general guide. I strongly recommend keeping meticulous records of your income and expenses throughout the year. Consider using accounting software or working with a qualified tax professional (like myself!) to ensure you're taking all the deductions you're entitled to and complying with all federal and Arizona tax regulations. Proactive tax planning can save you significant money and stress during tax season. Good luck with your Instacart business!