Instacart Shopper Taxes in Alabama - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Alabama

Navigating the sweet tea and sunshine of Alabama as an Instacart shopper offers flexibility, but also brings tax responsibilities. As an independent contractor, earnings from Instacart are considered self-employment income, requiring careful attention during tax season.

The IRS requires all self-employed individuals, including Instacart shoppers, to report their income and pay taxes. This is typically done using Schedule C (Profit or Loss from Business) when filing Form 1040. Furthermore, because no taxes are automatically withheld from your Instacart earnings, you’ll likely owe self-employment tax, covering both Social Security and Medicare contributions.

How Alabama Handles Gig Worker Taxes

As a resident of Alabama, you are required to file a state income tax return, even if your only income is from Instacart. Alabama utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Alabama’s tax brackets are expected to remain similar to prior years, ranging from 1.7% to 5.0%. It's crucial to accurately calculate your Alabama adjusted gross income to determine your tax liability. The primary form for self-employed individuals to report income and calculate Alabama income tax is Form A-4, the Alabama Individual Income Tax Return. You will need to report your federal adjusted gross income from your Form 1040 onto your Alabama return. Alabama also allows for certain deductions and credits that may reduce your tax burden, so exploring these options is recommended. Keep detailed records of all income and expenses related to your Instacart work to ensure accurate reporting. Alabama also offers options for online filing, which can streamline the process. Remember to check the Alabama Department of Revenue website for the most up-to-date information and forms.

You can find more information and resources on the Alabama Department of Revenue website: https://revenue.alabama.gov/

Top Tax Deductions for Alabama Drivers

• Standard Mileage: The most popular deduction for Instacart shoppers. The 2025 rate is 70 cents per mile. Given Alabama’s generally reasonable gas prices, the standard mileage rate is likely to be a beneficial option for most shoppers.
• Tolls & Parking: While Alabama doesn’t have extensive toll road systems, any tolls incurred during deliveries are deductible. Parking fees directly related to Instacart deliveries are also deductible.
• Phone & Data Plan: You can deduct the percentage of your phone and data plan that you use for business purposes. Keep a log of business-related calls and data usage to support your deduction.
• Vehicle-Related Costs: Expenses like car washes, phone mounts, insulated hot/cold bags, and dash cams used specifically for Instacart deliveries are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas, oil changes, or repairs in the same year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

This tax covers both Social Security and Medicare taxes. Unlike traditional employment where your employer withholds these taxes, as an Instacart shopper, you are responsible for paying both the employer and employee portions, totaling 15.3% on net earnings over $400. You’ll calculate this tax on Schedule SE (Self-Employment Tax) and include it with your Form 1040.