Instacart Shopper Taxes in Michigan - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Michigan?

Yes, absolutely. Income earned as an Instacart shopper is taxable at both the federal and Michigan state levels. Because Instacart treats you as an independent contractor, not an employee, you are considered self-employed by the IRS and the State of Michigan.

Federal Requirements: You'll report your Instacart earnings 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). It's crucial to keep accurate records of all income and expenses.

Michigan Specific Rules: Michigan has a flat income tax rate of 4.05% for the 2024 tax year (filing in 2025). Your net profit from Schedule C will be added to your other income, and this total taxable income will be subject to the 4.05% rate. Michigan also requires you to file a state income tax return (Form MI-1040) to report this income.

Top Tax Write-offs for Instacart Shoppers

As a self-employed Instacart shopper, you can significantly reduce your tax liability by claiming eligible business deductions. Here are some key write-offs:

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per mile for business use. Keep a detailed mileage log (date, destination, business purpose, miles driven). You can use apps to help with this.
• Hot Bags & Equipment: The cost of insulated bags, phone mounts, car chargers, and other equipment used specifically for Instacart shopping are deductible.
• Smartphone & Data Plan (Partial): If you use your smartphone and data plan for Instacart, you can deduct the percentage of the cost attributable to business use. For example, if you use your phone 75% for Instacart, you can deduct 75% of the monthly bill.
• Instacart Shopper Software/Apps: Any subscription fees or costs associated with apps or software used to manage your Instacart business (beyond the standard smartphone OS) 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 – a total of 15.3%.

You'll calculate this tax on Schedule SE (Self-Employment Tax). However, you only pay self-employment tax on your net earnings after subtracting your business expenses (from Schedule C) and only on earnings over $400. The good news is that half of your self-employment tax is deductible from your gross income on Form 1040.

Closing Tip for Michigan Residents

Tax time can be complex, especially when you're self-employed. I strongly recommend keeping meticulous records throughout the year – income statements from Instacart, receipts for all expenses, and a detailed mileage log. Consider using accounting software or consulting with a qualified tax professional (like myself!) to ensure you're taking all the deductions you're entitled to and complying with both federal and Michigan tax laws. Don't leave money on the table!