Shopping and delivering groceries for Instacart can be a flexible way to earn money. But when you work as an independent contractor, taxes aren’t withheld from your payments. That means you’re responsible for tracking your income and expenses, paying estimated taxes, and filing your return.
This guide explains the basics for Instacart shoppers. It is educational, not tax advice. Platform policies and tax rules change, so verify details on IRS.gov, in your Instacart account, and with a tax professional.
Are You an Employee or an Independent Contractor?
Most Instacart shoppers who deliver orders using their own vehicle are classified as independent contractors, not employees. That means:
- You’re self-employed for tax purposes.
- No income tax, Social Security, or Medicare is withheld from your pay.
- You’re responsible for self-employment tax.
- You can deduct business expenses.
Some roles on the platform, such as certain in-store shopper positions, may be set up as employment with taxes withheld and a Form W-2. Check which tax form you receive. If you receive a W-2, those earnings are handled differently from contractor income.
Tax Forms You May Receive
- Form 1099-NEC (Nonemployee Compensation): the form platforms commonly use to report contractor earnings. It’s generally sent by the end of January.
- Form 1099-K: may be issued in some cases by payment processors.
- Form W-2: if you were classified as an employee in any role.
Reporting thresholds have been changing, so you may or may not receive a form even if you earned money. The rule is simple: all income is taxable and must be reported, whether or not you get a form.
You can also check your earnings summaries in the Instacart shopper app or dashboard, which can help you total your income and compare it with your tax forms.
What Counts as Income?
Generally, your taxable income includes:
- Batch or order payments from Instacart
- Customer tips
- Bonuses and promotions
- Incentive payments
Compare your forms with your own records, because it’s possible that a tax form doesn’t include every item. Report all your income and keep records.
How Instacart Shoppers Are Taxed
As a contractor, you:
- Report income and expenses on Schedule C with your personal tax return.
- Pay income tax on your net profit (income minus allowable expenses).
- Pay self-employment tax for Social Security and Medicare. See Self-Employment Tax Explained.
- Generally make quarterly estimated payments. See our Freelance Tax Deadlines: 2026–2027 Calendar.
In general, if your net earnings from self-employment are $400 or more for the year, you must file a return and pay self-employment tax. Confirm the current rules on IRS.gov. You may also owe state income tax, depending on where you live. See our state guides for California, Texas, New York, Florida, Illinois, and Washington.
Deductions for Instacart Shoppers
Deductions lower your taxable profit. An expense must be ordinary and necessary for your business, and you need records.
Vehicle: the biggest deduction
You generally have two ways to deduct vehicle costs:
| Method | How it works | Notes |
|---|---|---|
| Standard mileage rate | Multiply your business miles by the IRS rate for the year | Simple. Covers gas, maintenance, insurance, depreciation, and similar costs, so you can’t deduct those separately |
| Actual expenses | Deduct the business-use percentage of gas, repairs, insurance, registration, and similar costs | More recordkeeping. Can be better for some vehicles |
Check the current rate and rules on IRS.gov. You usually must choose a method carefully, because switching later can have restrictions. Ask a tax professional if you’re unsure.
What counts as business miles?
Generally, miles you drive for your shopping and delivery work, such as driving to the store, between stores, and to the customer’s address. Commuting from home to a regular workplace usually doesn’t count. The rules for when your day of work starts can be complex, especially if you work from home, so ask a professional if you’re unsure.
Keep a mileage log, whether on paper or with an app. Record the date, miles, and purpose. See How to Track Mileage for Freelance Tax Deductions.
Other common deductions
- Parking and tolls while working
- Phone and data plan, for the business-use portion
- Insulated bags, coolers, and ice packs
- Phone mounts, chargers, and similar supplies
- Background check or onboarding fees, if you paid them
- Tax preparation software or fees
- Business insurance for delivery use, if you pay for it separately and aren’t using the standard mileage rate for those costs
- Self-employed health insurance premiums, with conditions
- Retirement contributions to a SEP IRA or Solo 401(k). See SEP IRA vs. Solo 401(k).
For general rules, see IRS Publication 463 and Publication 535.
What’s not deductible
- Groceries or items you buy for customers that are reimbursed. Those are not your business expenses.
- Personal expenses and personal driving
- Expenses without records
- Both mileage and actual vehicle costs for the same vehicle and period
If you pay for a customer’s order yourself and get reimbursed, the reimbursement is not additional income, but you should be careful to track it. If something wasn’t reimbursed, ask a tax professional how to treat it.
Insurance Matters Too
Your personal auto policy may not cover delivery work, and the platform’s coverage may have gaps. We explain the rideshare situation in Rideshare Insurance for Uber/Lyft Drivers, including a section on delivery. Ask your insurer directly about delivery use before you drive.
How Much to Set Aside for Taxes
Your rate depends on your total income, filing status, and state. A practical approach:
- Track your net profit, after expenses, throughout the year.
- Remember that you’ll owe self-employment tax, which is 15.3% (12.4% Social Security and 2.9% Medicare) on most of your net earnings, plus income tax.
- Set aside a percentage of every payout in a separate savings account.
- Make estimated tax payments if you expect to owe enough.
If Instacart is a side job and you also have a W-2 job, you might be able to adjust your W-4 withholding at your regular job to cover some of the extra tax. A tax professional can help you do the math.
Keeping Records
Good records save money and stress:
- Download your earnings summaries and tax forms from your account.
- Use a mileage tracker or log.
- Keep receipts for supplies, tolls, and parking.
- Use a separate bank account for gig income and expenses.
- Save phone bills and calculate the business-use portion.
- Use an expense tracking app and a simple bookkeeping system.
Steps to File Your Taxes
- Gather your documents: Form 1099-NEC (and any other forms), earnings summaries, mileage log, and receipts.
- Total your income from all sources, including tips and bonuses.
- Choose your vehicle deduction method and calculate it.
- List other deductible expenses.
- Complete Schedule C to find your net profit.
- Complete Schedule SE to calculate self-employment tax.
- Add state tax information, if applicable.
- File your return and pay any balance due by the deadline, even if you request an extension to file.
- Plan your estimated payments for the new year.
Free and paid tax software can walk you through Schedule C, and some free filing options exist for people under certain income levels. Check IRS.gov for current options.
Common Mistakes
- Not tracking mileage.
- Forgetting to set aside money for taxes.
- Ignoring tips and bonuses as income.
- Deducting both mileage and actual vehicle expenses.
- Skipping quarterly estimated payments.
- Mixing personal and gig money.
- Assuming no form means no income to report.
- Deducting groceries bought for customers that were reimbursed.
Frequently Asked Questions
Do Instacart shoppers have to pay taxes?
Yes. Earnings from Instacart are generally taxable, whether or not you receive a form.
Is Instacart income reported on a 1099 or a W-2?
Contractors typically receive a 1099-NEC. Employees receive a W-2. Check which applies to you.
Can I deduct my mileage?
Yes, business miles can be deducted using the standard mileage rate or actual expenses, with records.
Are tips taxable?
Yes. Tips are generally part of your taxable income.
Do I need to make quarterly estimated payments?
Often yes, if you expect to owe enough. Ask a tax professional or check IRS guidance.
Can I deduct my phone bill?
You can generally deduct the business-use portion.
What if I only worked a few weeks?
You still need to report the income. If net self-employment earnings reach the filing threshold, you owe self-employment tax.
Final Thoughts
As an Instacart shopper, you’re running a small business. Track your income and mileage, save for taxes, claim the expenses you’re entitled to, and keep good records. A little organization during the year makes tax time much easier.
Disclaimer: This article is for informational and educational purposes only and does not constitute tax, legal, or financial advice. Platform policies, tax rules, and reporting thresholds change and depend on your situation. Verify current information at IRS.gov and in your Instacart account, or consult a licensed tax professional.