Instacart Shopper Taxes in Kentucky - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Kentucky?

Yes, absolutely. Income earned as an Instacart shopper is taxable at both the federal and Kentucky state levels. Because Instacart treats you as an independent contractor, not an employee, you are responsible for reporting your earnings and paying all applicable taxes.

Federal Requirements: You'll report your Instacart income on Schedule C (Profit or Loss from Business) when you file your federal income tax return (Form 1040). This form allows you to deduct business expenses, ultimately determining your net profit (or loss). The net profit is then added to your other income and taxed accordingly.

Kentucky Specific Rules: Kentucky has a flat income tax rate of 4.0% for the 2024 tax year (filing in 2025). Your net profit from Schedule C will be included in your Kentucky income calculation, and this flat rate will be applied. Kentucky also requires you to file a state income tax return (Form 740) to report this income.

Top Tax Write-offs for Instacart Shoppers

As an Instacart shopper, you have several opportunities to reduce your taxable income through legitimate business deductions. Here are a few key ones:

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per mile for business use. Keep a detailed log of all miles driven for Instacart shopping (from leaving to pick up the order, to delivery, and returning). You can use apps to track this automatically.
• Hot Bags & Equipment: The cost of insulated bags, phone mounts, car chargers, and other equipment used specifically for Instacart shopping are deductible.
• Smartphone Expenses: If you use your smartphone primarily for Instacart, you can deduct the percentage of the phone bill attributable to business use. If you use it for personal and business, you can only deduct the business portion.
• Instacart Shopper Software/Apps: Any subscription fees or costs associated with apps or software used to manage your Instacart business (e.g., mileage trackers, expense trackers) are deductible.

The 15.3% Self-Employment Tax Surprise

Many independent contractors are surprised by self-employment tax. When you're an employee, your employer pays half of your Social Security and Medicare taxes. As a self-employed individual, you're responsible for both the employer and employee portions. This combined tax is 15.3% (12.4% for Social Security and 2.9% for Medicare) on your net earnings.

You'll calculate this tax on Schedule SE (Self-Employment Tax). However, you only pay self-employment tax on earnings over $400. The good news is that you can deduct one-half of your self-employment tax from your adjusted gross income on Form 1040, which helps reduce your overall tax liability.

Closing Tip for Kentucky Residents

Tax laws can be complex, and it's easy to miss deductions. I strongly recommend keeping meticulous records of all your income and expenses throughout the year. Consider using accounting software or a spreadsheet to stay organized. If you're unsure about any aspect of your tax situation, consulting with a qualified tax professional (like myself!) can save you money and prevent potential issues with the IRS or the Kentucky Department of Revenue. Wishing you a profitable and tax-smart year as an Instacart shopper in Kentucky!