Instacart Shopper Taxes in Hawaii - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Hawaii?

Yes, absolutely. Income earned as an Instacart shopper is taxable at both the federal and Hawaii 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.

Hawaii State Taxes: Hawaii has a graduated income tax system. This means the tax rate you pay increases as your income increases. You'll use Form N-11 to file your Hawaii state income tax return. Your federal adjusted gross income (AGI) is a starting point for calculating your Hawaii taxable income, and you'll need to report your Schedule C profit on your Hawaii return. Hawaii also has tax brackets, so understanding these is crucial for accurate filing. You can find the current Hawaii tax brackets on the Hawaii Department of Taxation website: https://tax.hawaii.gov/

Top Tax Write-offs for Instacart Shoppers

As an Instacart shopper, you have several potential tax deductions that can significantly lower your tax bill. Keep excellent records of all expenses!

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per mile for business use. You'll need to track all miles driven for Instacart shopping (from leaving to pick up the order, to delivery, and returning). You can use an app or a mileage log. You cannot include commuting miles.
• Phone Expenses: If you use your personal phone for Instacart (which is likely), you can deduct the percentage of the phone bill attributable to business use. Keep records of your phone bill and estimate the business use percentage.
• Hot Bags & Shopping Equipment: The cost of insulated bags, shopping carts, or other equipment specifically used for Instacart shopping is 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 these 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%. This is calculated on Schedule SE (Self-Employment Tax). However, you only pay self-employment tax on profits over $400. The good news is that 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 Hawaii Residents

Navigating taxes as an independent contractor can be complex, especially with Hawaii's graduated income tax system. I strongly recommend keeping meticulous records of all 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 eligible deductions and filing accurately. Don't wait until the last minute – proactive tax planning can save you time, money, and stress. Mahalo!