Do Instacart shoppers qualify for "no tax on tips"?
The 2025 tax law created a federal income tax deduction of up to $25,000 a year for qualified tips received in listed occupations, for tax years 2025 through 2028. The final IRS and Treasury rules (April 2026) list 71 occupations, including goods delivery workers, and self-employed workers can qualify. Many Instacart full-service shoppers are likely to fit, but confirm with a tax professional. The deduction reduces income tax only; tips are still subject to self-employment tax.
How the deduction works
- Maximum: $25,000 per return per year.
- Years: 2025 through 2028.
- Phase-out: reduced by $100 for every $1,000 of modified AGI above $150,000 ($300,000 for joint filers).
- Itemizing not required: you can take it with the standard deduction.
- Self-employed limit: the deduction cannot exceed your net income from the business in which you earned the tips.
- Requirements: a valid Social Security number; married couples must file jointly.
What counts as a qualified tip
Qualified tips are paid voluntarily by the customer, without being required or negotiated, in an occupation on the IRS list. Customer tips paid through the app are typically voluntary. Automatic service charges do not count.
Does it apply to Instacart shoppers?
The final rules include goods delivery among the listed occupations. Full-service shoppers both shop and deliver goods and are paid tips by customers, so many are likely to qualify. The IRS has not named specific platforms, so check the final occupation list and confirm with a tax professional.
Example (illustrative)
A single shopper with $14,000 of tips and $29,500 of net profit, well under $150,000 MAGI, could deduct up to $14,000 from taxable income. At a 12% income tax bracket that is roughly $1,680 less income tax. Self-employment tax on that profit does not change.
Records you need
- Weekly earnings statements showing tips separately from batch pay.
- Your 1099 and how much of it was tips.
- A year-end tip total that matches those statements.
Frequently asked questions
Is there no tax on tips for Instacart shoppers?
The deduction covers qualified tips in listed occupations, including goods delivery, and self-employed workers can qualify. Many full-service shoppers are likely to fit; confirm with a tax professional.
How much is the no tax on tips deduction?
Up to $25,000 per year for 2025 through 2028, reduced above $150,000 modified AGI ($300,000 joint).
Do Instacart tips still have self-employment tax?
Yes. The deduction reduces income tax only. Tips remain part of self-employment earnings.
Do I need to itemize to deduct tips?
No. The qualified tips deduction is available whether you itemize or take the standard deduction.
Go deeper. Chapter 13 of the guide covers taxes for shoppers in full, with a tracker spreadsheet that separates tips from batch pay. Get the full guide or read chapters 1–2 free.
Related guides
- How do Instacart shoppers pay taxes in 2026?
- What 1099 do Instacart shoppers get?
- What can Instacart shoppers deduct besides mileage?