Instacart Shopper Tax Guide 2025: Complete Deduction Guide

Understanding Instacart Taxes

As an Instacart shopper, you're an independent contractor, not an employee. This means:

• You'll receive a 1099-NEC form (if you earned $600+)
• You're responsible for self-employment taxes (15.3%)
• You can deduct business expenses to reduce your tax liability
• You may need to make quarterly estimated tax payments

Essential Tax Deductions for Instacart Shoppers

1. Vehicle Expenses (Your Biggest Deduction)

You have two options for deducting vehicle expenses:

Standard Mileage Method (Recommended)

• 2025 Rate: 67¢ per business mile
• What to Track: Miles from store to customer, between stores, returning home
• Average Savings: $800-1,500 annually
• Tools: Use apps like MileIQ, Stride, or TaxFix's mileage tracker

Actual Expense Method

Deduct the business percentage of:

• Gas and oil
• Repairs and maintenance
• Insurance premiums
• Vehicle registration and licensing
• Depreciation or lease payments

2. Phone and Data Plan

• Deductible: Business percentage of your phone bill
• Typical Deduction: 50-80% of monthly bill
• Annual Savings: $300-600
• Documentation: Keep phone bills and usage logs

3. Insulated Bags and Equipment

• Insulated delivery bags
• Coolers and ice packs
• Shopping carts or baskets
• Phone mounts and chargers
• Hand sanitizer and cleaning supplies

4. Safety Equipment

• Masks and gloves
• Hand sanitizer
• Safety vests or reflective gear
• First aid supplies

5. Parking and Tolls

• Parking fees at stores or customer locations
• Toll road charges during deliveries
• Keep all receipts and document business purpose

6. Home Office Deduction

If you use part of your home exclusively for Instacart business:

• Simplified Method: $5 per square foot (up to 300 sq ft)
• Maximum Deduction: $1,500 annually
• Requirements: Exclusive business use of the space

Quarterly Tax Payments

If you expect to owe $1,000+ in taxes, you should make quarterly payments:

2025 Due Dates

• Q1: April 15, 2025
• Q2: June 16, 2025
• Q3: September 15, 2025
• Q4: January 15, 2026

How Much to Pay

Generally, pay 25-30% of your net Instacart income each quarter:

• Self-employment tax: 15.3%
• Federal income tax: 10-24% (depending on income)
• State income tax: Varies by state

Record Keeping Best Practices

Essential Records to Keep

• Mileage logs: Date, starting/ending locations, business purpose
• Receipts: All business-related purchases
• Bank statements: Showing Instacart payments
• 1099 forms: From Instacart and other platforms

Recommended Apps

• Mileage: MileIQ, Stride, Everlance
• Receipts: Shoeboxed, Receipt Bank
• Comprehensive: TaxFix (handles everything)

Common Tax Mistakes to Avoid

1. Not tracking mileage: This is your biggest deduction
2. Missing quarterly payments: Results in penalties
3. Poor record keeping: Can't claim deductions without documentation
4. Mixing personal and business expenses: Only business portion is deductible
5. Not saving for taxes: Set aside 25-30% of earnings

Tax Planning Strategies

Maximize Your Deductions

• Track every business mile
• Keep receipts for all business purchases
• Consider equipment purchases before year-end
• Document business use percentage for mixed-use items

Business Structure Considerations

Most Instacart shoppers operate as sole proprietors, but consider:

• LLC: Liability protection, potential tax benefits
• S-Corp: Possible self-employment tax savings for high earners
• Consult a professional: For personalized advice

State-Specific Considerations

Tax requirements vary by state:

• No state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
• State quarterly payments: May be required in some states
• Local taxes: Some cities have additional requirements

Sample Tax Calculation

Getting Professional Help

Consider professional tax help if you:

• Earn more than $30,000 annually from gig work
• Work multiple platforms
• Have complex deductions
• Want to maximize your savings
• Need help with quarterly planning