Instacart Shopper Taxes in Colorado - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Colorado?

Yes, absolutely. Income earned as an Instacart shopper is taxable at both the federal and Colorado state levels. Because Instacart classifies you as an independent contractor (Form 1099-NEC will be issued if you earn $600 or more), you are responsible for reporting your earnings and paying all applicable taxes.

Federal Taxes: You'll report your Instacart income on Schedule C (Profit or Loss From Business) as part of your Form 1040. This form allows you to deduct business expenses (more on that below) to arrive at your taxable profit. The official IRS guidance for independent contractors is crucial – refer to IRS Publication 334, Tax Guide for Small Business.

Colorado State Taxes: Colorado has a flat income tax rate of 4.40% for the 2024 tax year (filing in 2025). Your taxable income, after federal adjustments and deductions, will be subject to this rate. You'll report your income and calculate your Colorado tax liability using Form DR 0104, Colorado Individual Income Tax Return. Colorado also requires you to report your federal Schedule C income on their form.

Top Tax Write-offs for Instacart Shoppers

As an Instacart shopper, you have several opportunities to reduce your tax liability by claiming legitimate business expenses. Keep excellent records (receipts, mileage logs, etc.) to support your deductions.

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per mile for business use of your vehicle. You'll need to track all miles driven for Instacart deliveries – from leaving to pick up the order, to dropping it off at the customer. You can use an app or a mileage log. You cannot include commuting miles.
• Smartphone & Data Plan: If you use your smartphone and data plan primarily for Instacart work, you can deduct the portion of the expenses attributable to business use. If it's a personal phone, you can only deduct the business percentage.
• Hot Bags & Shopping Supplies: The cost of insulated bags, reusable shopping bags specifically for Instacart, hand sanitizer, and other supplies directly related to your deliveries are deductible.
• Software & Apps: If you use any apps or software to help manage your Instacart business (e.g., mileage trackers, expense trackers), the cost of those subscriptions is deductible.

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% (12.4% for Social Security and 2.9% for Medicare).

You'll calculate this tax on Schedule SE (Self-Employment Tax). However, you only pay self-employment tax on 92.35% of your net earnings (your profit after business expenses). The good news is you can deduct one-half of your self-employment tax from your gross income on Form 1040, which reduces your overall tax liability.

Closing Tip for Colorado Residents

Tax laws can be complex, and this information is for general guidance only. I strongly recommend keeping meticulous records throughout the year and considering consulting with a qualified tax professional, especially if your Instacart income is significant or your tax situation is complicated. Colorado's tax laws, while straightforward with the flat rate, still require accurate reporting. Don't hesitate to seek professional help to ensure you're maximizing your deductions and complying with all applicable regulations. Good luck, and happy shopping!