Instacart Shopper Taxes in Iowa - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Iowa

Navigating the rolling hills and bustling towns of Iowa 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 primarily done using Schedule C (Profit or Loss from Business) when filing your federal income tax return (Form 1040). Furthermore, earnings over $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions, which are not automatically withheld from your Instacart payments.

How Iowa Handles Gig Worker Taxes

As a resident of Iowa, you are required to file a state income tax return, even if your only income is from Instacart. Iowa utilizes a graduated income tax system, meaning the tax rate increases as your income rises. For the 2025 tax year, Iowa’s tax brackets are expected to remain similar to prior years, though official rates will be released by the Iowa Department of Revenue. Self-employed individuals will primarily use Iowa Form 1040 and Schedule A (Iowa Adjustment to Income) to calculate their state income tax liability. It's crucial to accurately report your net earnings from Schedule C on your Iowa return. Iowa also allows for certain deductions and credits that may reduce your overall tax burden. Keep detailed records of all income and expenses related to your Instacart work. Iowa also has a system for estimated tax payments, and if your tax liability is expected to be $1,000 or more, you may be required to make quarterly estimated tax payments to avoid penalties. The Iowa Department of Revenue provides comprehensive resources and tools for self-employed individuals; you can find more information at the Iowa Department of Revenue website.

Top Tax Deductions for Iowa Drivers

• Standard Mileage: The most popular deduction for Instacart shoppers. For the 2025 tax year, the standard mileage rate is 70 cents per mile. Given Iowa’s generally reasonable gas prices, the standard mileage rate is likely to be a beneficial option for most shoppers.
• Tolls & Parking: While Iowa doesn't have extensive toll roads, any tolls incurred while making deliveries are deductible. Parking fees directly related to your Instacart deliveries are also deductible.
• Phone & Data Plan: You can deduct the percentage of your phone and data plan that is used for business purposes. Keep a log of your business usage to support this 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, repairs, insurance) in the same tax year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

The 15.3% self-employment tax covers both Social Security and Medicare taxes. Unlike traditional employment where these taxes are withheld from your paycheck, as an Instacart shopper, you are responsible for paying both the employer and employee portions. This tax applies to your net earnings – your total Instacart income minus your business expenses – exceeding $400.