Instacart Shopper Taxes in Austin, Texas - 2026

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Austin, Texas

Navigating the vibrant streets of Austin as an Instacart shopper offers flexibility, but it also comes with tax responsibilities. As an independent contractor, earnings from delivering groceries and goods throughout the city are considered self-employment income, requiring careful tax planning for the 2025 tax year.

The IRS requires all Instacart shoppers to report their income on Schedule C (Profit or Loss from Business) when filing their federal income tax return. Crucially, this income is also subject to self-employment tax, which covers both Social Security and Medicare taxes. Unlike traditional employment, no taxes are automatically withheld from your Instacart earnings, meaning you’re responsible for paying these taxes directly to the IRS.

How Texas Handles Gig Worker Taxes

The big perk in the Lone Star State is no personal income tax. However, be aware of the Texas Franchise Tax. While it has a high threshold (over $1.2 million) that rarely applies to solo gig workers, it's a key part of the state's business tax structure. As an Instacart shopper operating in Austin, you won’t face state income tax on your earnings, but maintaining accurate records is still vital. The Texas Comptroller’s office provides resources for understanding business taxes in the state, including information on potential sales tax implications if you were to, for example, purchase supplies for resale (though this is unlikely for typical Instacart shopping). Austin’s growing population and demand for grocery delivery mean consistent work opportunities, but also increased competition. Parking can be a challenge in certain areas of the city, and any parking fees incurred while actively shopping or delivering are potentially deductible (see section below). It’s important to remember that even without state income tax, meticulous record-keeping is essential for maximizing deductions and ensuring compliance with federal regulations. Understanding the nuances of the Texas Franchise Tax, even if it doesn’t directly apply, demonstrates a proactive approach to business ownership.

For more information, visit the Texas Comptroller of Public Accounts website.

Top Tax Deductions for Austin, Texas Drivers

• Standard Mileage: The #1 deduction. The 2025 rate is 70 cents per mile. With relatively lower gas prices in Texas compared to states like California, the standard mileage rate is often the most advantageous method for Instacart shoppers in Austin.
• Tolls & Parking: Austin utilizes the TxTag system for toll roads. Keep detailed records of all toll expenses and parking fees incurred while actively working for Instacart.
• Phone & Data Plan: The percentage of your phone and data plan used for business purposes (e.g., using the Instacart app, navigation) is deductible.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts for safe navigation, and insulated hot/cold bags used specifically for Instacart deliveries are deductible.

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 yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

The 15.3% self-employment tax is comprised of two parts: 12.4% for Social Security and 2.9% for Medicare. Because Instacart and other gig platforms do not withhold these taxes from your earnings, it’s crucial to estimate your tax liability throughout the year and make quarterly estimated tax payments to the IRS to avoid penalties.