If you make money shopping and delivering orders through Instacart, taxes work differently than they do at a traditional W-2 job.
For independent-contractor gig work, taxes generally aren't automatically withheld from your earnings. That means you're responsible for tracking your income, mileage, and qualifying business expenses and reporting your business activity when you file your taxes.
The good news is that legitimate business expenses can reduce your business profit.
Here's what Instacart shoppers should know about taxes in 2026.
How Are Instacart Shoppers Taxed?
If you're performing Instacart work as an independent contractor, you're generally considered self-employed for federal tax purposes.
For many sole-proprietor gig workers, the basic calculation looks like:
Business income − allowable business expenses = business profit
That income and those expenses are generally reported on Schedule C.
If your net earnings from self-employment are $400 or more, self-employment tax rules generally apply and Schedule SE may also be required.
You don't need to create an LLC simply because you're doing independent-contractor gig work.
Does Instacart Take Taxes Out of Your Pay?
For independent-contractor earnings, generally no.
Unlike a traditional W-2 paycheck, federal income tax, Social Security tax, and Medicare tax generally aren't automatically withheld from payments to self-employed workers.
For example, if you earn:
$1,000 through Instacart
you shouldn't assume taxes have already been deducted before the money reaches you.
That's why tax planning and good recordkeeping are important for gig workers.
Do You Have to Report Instacart Income?
Generally, yes.
Gig economy income is generally taxable even when:
It's a side hustle
You only worked occasionally
You didn't make very much
You didn't receive a particular 1099
You also have a regular W-2 job
Don't make the mistake of assuming that no tax form means no taxable income.
Keep your own records showing what you earned throughout the year.
What Tax Forms Do Instacart Shoppers Get?
Depending on your payment arrangement and applicable reporting requirements, you may receive an information return such as a Form 1099 related to your independent-contractor income.
However, the most important thing to understand is:
A tax-form reporting threshold is not a tax-free income threshold.
Even if you don't receive a particular 1099, you generally still need to report your taxable gig income.
Keep your earnings statements, payment records, and any tax documents you receive so you can accurately determine your business income.
Mileage Can Be a Major Instacart Deduction
Instacart work can involve significant driving.
You may drive between stores, customer locations, and delivery areas throughout the day.
Qualifying business vehicle use may therefore be one of your largest potential deductions.
There's an important change for 2026.
If you're eligible to use the standard mileage method, the IRS business mileage rates are:
January 1 – June 30, 2026: 72.5¢ per mile
July 1 – December 31, 2026: 76¢ per mile
Because the rate changed halfway through the year, your records should allow you to determine when your qualifying business miles were driven.
Example
Suppose you drove:
6,000 qualifying business miles from January through June
6,000 × $0.725 = $4,350
Then:
6,000 qualifying business miles from July through December
6,000 × $0.76 = $4,560
Your simplified standard-mileage calculation would be:
$8,910
That's why maintaining an accurate mileage log throughout the year matters.
Standard Mileage vs. Actual Vehicle Expenses
Delivery drivers generally need to understand two approaches to vehicle expenses.
Standard Mileage Method
You calculate your deduction using your qualifying business mileage and the applicable IRS mileage rate.
Actual Expense Method
Depending on your eligibility and circumstances, you determine the business-use portion of qualifying actual vehicle costs.
Those costs may potentially include items such as:
Gas or electricity
Insurance
Repairs
Maintenance
Tires
Registration
Depreciation or applicable lease expenses
You generally shouldn't use the standard mileage method and then separately deduct vehicle operating costs already incorporated into that mileage rate.
That would potentially double-count the same costs.
What Other Expenses Can Instacart Shoppers Potentially Deduct?
Your vehicle isn't necessarily your only business expense.
Depending on your individual circumstances, ordinary and necessary business expenses could potentially include:
Business-use portion of your cell phone
Phone mount
Car charger
Insulated bags
Carts or other equipment used for deliveries
Certain business or mileage-tracking apps
Qualifying tolls
Qualifying parking
Other supplies used for your business
If something is used for both personal and business purposes, generally only the qualifying business portion should be treated as a business expense.
Keep documentation supporting the expenses you claim.
Are the Groceries You Shop for a Tax Deduction?
Generally, the customer's groceries aren't your personal business expense simply because you're the shopper selecting and delivering them.
You're fulfilling the customer's order.
Don't confuse the value of the customer's groceries with the costs you personally incur to operate your Instacart business.
Your own qualifying business expenses—such as vehicle use, delivery equipment, or the business portion of certain phone costs—are a different matter.
How Is Your Instacart Business Profit Calculated?
One of the biggest mistakes new shoppers make is looking at gross payouts and treating the entire amount as profit.
Suppose you earn:
$22,000 from Instacart
and have:
$8,000 of allowable business expenses
Your simplified business profit would be:
$14,000
That business profit is much more relevant to your tax calculation than simply assuming the entire $22,000 is pure profit.
Your actual tax return may involve additional rules and calculations.
What Is Self-Employment Tax?
Self-employed Instacart shoppers may also be responsible for self-employment tax.
Self-employment tax generally covers Social Security and Medicare taxes.
The rate is generally 15.3%, consisting of:
12.4% Social Security
2.9% Medicare
Generally, if your net earnings from self-employment are $400 or more, Schedule SE may be required.
But don't simply multiply your gross Instacart payouts by 15.3%.
Self-employment tax is calculated using net earnings from self-employment, and additional calculation rules and limitations apply.
Federal income tax may also apply depending on your overall tax situation.
Do Instacart Shoppers Need to Pay Quarterly Taxes?
Not every Instacart shopper automatically needs to make quarterly estimated tax payments.
However, because taxes generally aren't withheld from independent-contractor income, some self-employed taxpayers may need to make estimated payments during the year.
Whether that's necessary depends on your overall tax situation, including:
Business profit
Other gig income
W-2 wages
Tax withholding
Other income
Deductions and credits
Don't assume every gig worker has the exact same quarterly-tax requirement.
What If You Have a W-2 Job Too?
You can have a regular W-2 job and make money through Instacart on the side.
Your employer generally withholds taxes from your W-2 paycheck.
Your independent-contractor Instacart income generally doesn't have that same employee withholding.
Both can affect your individual tax return.
Depending on your situation, the taxes already withheld from your W-2 wages may help cover some of your overall tax liability.
What If You Also Drive for DoorDash, Uber Eats or Spark?
Multi-apping is common.
You might earn money from:
Instacart + DoorDash + Uber Eats + Spark
during the same year.
You need to properly account for income from all of your platforms.
You also need accurate records of your overall qualifying business mileage and expenses.
Remember:
You can't deduct the same business mile twice simply because two apps were running.
If you drove five qualifying business miles while multiple apps were active, you drove five miles—not five miles for every app.
What Records Should Instacart Shoppers Keep?
Good recordkeeping makes tax season significantly easier.
Consider keeping:
Instacart earnings records
Forms 1099 you receive
Mileage logs
Business expense receipts
Cell phone bills
Vehicle records
Tolls and parking records
Records from other gig apps
Estimated tax payment confirmations
W-2s if you also have an employee job
You don't need an overly complicated bookkeeping system.
You need records that accurately support the income and expenses reported on your return.
Common Instacart Tax Mistakes
Avoid these common mistakes:
❌ Assuming Instacart already took taxes out
❌ Thinking no 1099 means no taxable income
❌ Treating gross payouts as pure business profit
❌ Waiting until tax season to reconstruct mileage
❌ Forgetting legitimate business expenses
❌ Deducting personal expenses as business expenses
❌ Deducting the customer's groceries as your own business expense
❌ Using standard mileage and separately deducting vehicle operating expenses already included in the mileage rate
❌ Multiplying gross Instacart earnings by 15.3% and assuming that's your entire tax bill
❌ Forgetting income from DoorDash, Uber Eats, Spark, or other apps
Frequently Asked Questions
Do Instacart shoppers have to pay taxes?
Independent-contractor Instacart income is generally taxable. Business income and allowable expenses are commonly reported on Schedule C for sole proprietors.
Does Instacart take taxes out?
For independent-contractor earnings, federal taxes generally aren't automatically withheld like they are from a traditional W-2 paycheck.
Can Instacart shoppers deduct mileage?
Qualifying business vehicle use may be deductible. For 2026, the standard business mileage rate is 72.5¢ per mile from January through June and 76¢ per mile from July through December.
Can Instacart shoppers deduct gas?
If you're using the standard mileage method, you generally don't separately deduct gas because vehicle operating costs are incorporated into the mileage rate.
The actual-expense method works differently.
Can I deduct my phone?
The qualifying business-use portion of certain phone expenses may potentially be deductible.
If you use the same phone personally, don't automatically deduct 100% of the bill.
What if I don't receive a 1099?
You generally still need to report your taxable gig income. Your responsibility to report income doesn't disappear simply because you didn't receive an information return.
What if I use several delivery apps?
Keep records covering all of your gig income, qualifying mileage, and business expenses. Don't duplicate the same mileage or expense across multiple apps.
The Bottom Line
Instacart taxes become much easier when you have a system:
Track your income.
Track your qualifying business mileage.
Keep records of legitimate business expenses.
Understand the difference between gross earnings and business profit.
Plan for taxes that aren't being withheld.
Don't wait until tax season to start organizing everything.
A little recordkeeping throughout the year can save a lot of confusion later.
Related Gig Worker Tax Resources
The Complete Gig Worker Tax Guide for 2026
The Complete Mileage Deduction Guide for Gig Workers
How to File Taxes With DoorDash, Uber Eats & Spark Income
The Complete DoorDash Tax Guide for 2026
How Do Uber Eats Drivers File Taxes? 2026 Guide
The Complete Walmart Spark Driver Tax Guide for 2026
Need Help Filing Your Instacart Taxes?
At SharpLine Tax, I specialize in tax preparation for gig workers and independent contractors.
Whether Instacart is your full-time income, a weekend side hustle, or one of several gig apps you use, I can help you organize your tax information and prepare your return.
Ready to stop guessing and get your Instacart taxes handled correctly? Get started with SharpLine Tax and let me help you make sure your income, mileage, and deductions are properly accounted for.
