Instacart Shopper Taxes in Iowa - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Iowa?

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

Iowa State Taxes: Iowa has a graduated income tax system, meaning the tax rate you pay increases as your income increases. Your Instacart net profit (after Schedule C deductions) will be included in your total Iowa taxable income. You'll use Iowa Form 1040 to calculate your Iowa income tax liability based on the current year's tax brackets. For 2024 filing in 2025, be sure to check the Iowa Department of Revenue website for the most up-to-date brackets and forms: https://tax.iowa.gov/

Top Tax Write-offs for Instacart Shoppers

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

• Mileage: This is a big one! The IRS standard mileage rate for 2024 is 67 cents per mile for business use. Keep a detailed log of all miles driven for Instacart deliveries (from leaving to pick up the order to delivering it). You can use an app or a simple notebook.
• Phone Expenses: If you use your personal phone for Instacart (which is likely!), you can deduct the percentage of the phone bill that relates to your business use. For example, if you use your phone 60% of the time for Instacart, you can deduct 60% of your phone bill.
• Hot Bags & Shopping Supplies: The cost of insulated bags, reusable shopping bags specifically for Instacart, hand sanitizer, and other supplies directly related to your shopping and delivery work are deductible.
• Software & App Fees: Any fees you pay for apps or software that help you manage your Instacart business (e.g., mileage tracking apps, expense trackers) are deductible.

The 15.3% Self-Employment Tax Surprise

Because you're an independent contractor, you're responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This is called self-employment tax. The combined rate is 15.3% (12.4% for Social Security and 2.9% for Medicare) on your net earnings from Schedule C. However, you only pay self-employment tax on earnings over $400. You'll calculate this on Schedule SE (Self-Employment Tax). 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 Iowa Residents

Tax laws can be complex, and it's easy to miss deductions. I strongly recommend keeping meticulous records of all your 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 all federal and Iowa tax regulations. Don't hesitate to utilize the resources available on the Iowa Department of Revenue website (https://tax.iowa.gov/) for specific Iowa tax information. Wishing you a profitable and tax-efficient year as an Instacart shopper in Iowa!