Instacart Shopper Taxes in Arizona - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Arizona

Navigating the vibrant streets of Phoenix, Tucson, and beyond as an Instacart shopper offers flexibility, but also brings tax responsibilities. As an independent contractor, earnings from Instacart are considered self-employment income, requiring diligent record-keeping and accurate tax filing.

The IRS requires all self-employed individuals, including Instacart shoppers, to report their income and pay taxes. This is primarily done using Schedule C (Profit or Loss from Business) when filing Form 1040. Furthermore, earnings exceeding $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions, which are not automatically withheld from your Instacart payouts.

How Arizona Handles Gig Worker Taxes

As a resident of Arizona, a state income tax return is generally required, even if federal income tax isn't owed. Arizona operates under a flat income tax system, meaning all income is taxed at the same rate. For the 2025 tax year, the Arizona state income tax rate is 2.5%. Instacart shoppers filing as self-employed individuals will primarily use Form 140, Arizona Individual Income Tax Return, along with Schedule A (Arizona Adjustments to Federal Taxable Income) to report their business income and deductions. It's crucial to accurately calculate your net profit from Schedule C and transfer that amount to your Arizona return. Arizona also allows for certain deductions that may differ from federal rules, so careful review of the Arizona Department of Revenue’s instructions is essential. Remember to consider estimated tax payments throughout the year to avoid penalties. Arizona requires quarterly estimated tax payments if you expect to owe $1,000 or more in state income tax. Resources and forms can be found on the Arizona Department of Revenue website: https://azdor.gov/. Failure to file and pay on time can result in penalties and interest, so proactive tax planning is highly recommended.

Top Tax Deductions for Arizona Drivers

• Standard Mileage: The most popular deduction for Instacart shoppers. The 2025 rate is 70 cents per mile. Given Arizona's sprawling cities and reliance on personal vehicles, this deduction can significantly reduce your tax liability.
• Tolls & Parking: While Arizona doesn't have extensive toll road systems like some states, any tolls incurred during deliveries are deductible. Parking fees directly related to Instacart deliveries are also deductible.
• Phone & Data Plan: The portion of your monthly phone and data plan used for business purposes is deductible. Keep detailed records of business usage to justify the deduction.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts for safe navigation, and insulated hot/cold bags used exclusively for deliveries are deductible.

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

Understanding the 15.3% Self-Employment Tax

This tax comprises two components: 12.4% for Social Security and 2.9% for Medicare. Unlike traditional employment, Instacart and other gig platforms do not withhold these taxes from your earnings. Therefore, it’s your responsibility to calculate and pay this tax, typically through estimated tax payments made quarterly to both the IRS and the Arizona Department of Revenue.