Instacart Shopper Taxes in California - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in California

Navigating the Golden State’s diverse cities and delivering groceries through Instacart offers flexibility, but also brings tax responsibilities. As an independent contractor for Instacart in California, understanding your tax obligations is crucial for a smooth tax season.

The IRS considers income earned through Instacart as self-employment income. This means you’re responsible for reporting your earnings on Schedule C (Profit or Loss from Business) with your Form 1040, and paying self-employment taxes, which cover both Social Security and Medicare. Failure to accurately report income and pay taxes can result in penalties and interest.

How California Handles Gig Worker Taxes

As a resident of California, you are required to file a state income tax return, even if your federal tax liability is zero. California employs a graduated income tax system, meaning the tax rate increases as your income rises. This differs from a flat tax, where everyone pays the same percentage. Instacart earnings are considered taxable income in California, just like wages from a traditional job. The primary form for self-employed individuals to report income and calculate tax liability is Form 540, California Resident Income Tax Return. You’ll likely also need Schedule CA (540), California Adjustments – Residents, to report certain adjustments to your federal income. California also has a minimum franchise tax for those operating as sole proprietors, even if no profit is made. This is generally a small amount, but it's important to be aware of. Given California’s relatively high gas prices, it’s particularly important to carefully evaluate whether the standard mileage rate or the actual expense method will yield a larger deduction. The FTB provides detailed information and resources for self-employed individuals on their website: California Franchise Tax Board. Remember to keep accurate records of all income and expenses throughout the year to ensure accurate filing.

Top Tax Deductions for California Drivers

• Standard Mileage: The #1 deduction for most Instacart shoppers. The 2025 rate is 70 cents per mile. Given California’s consistently high gas prices, this rate is often very beneficial.
• Tolls & Parking: California drivers frequently encounter tolls, particularly around the Bay Area using the Fastrak system. These tolls, along with parking fees incurred while actively shopping or delivering, are deductible.
• Phone & Data Plan: If you use your phone for business purposes – accepting orders, navigating, communicating with customers – you can deduct the percentage of your monthly bill attributable to business use.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts for safe navigation, insulated hot bags, and even hand sanitizer are deductible as business expenses.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas or repairs in the same year. Choose the method that results in the largest 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. This combined rate is 15.3% on net earnings over $400. You can reduce your adjusted gross income (AGI) by one-half of your self-employment tax liability.