Instacart Shopper Taxes in Minnesota - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Minnesota?

Yes, absolutely. Income earned as an Instacart shopper is taxable at both the federal and Minnesota 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 Minnesota.

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 calculates your net profit – your earnings minus your business expenses. Only the net profit is subject to income tax.

Minnesota Requirements: Minnesota has a graduated income tax system, meaning the tax rate you pay increases as your income increases. Your Instacart net profit will be added to your other income (from a W-2 job, for example) and taxed according to the Minnesota tax brackets for the 2024 tax year. You'll use Form M1040 to calculate your Minnesota income tax liability. Minnesota generally follows federal rules regarding deductions, but there can be differences, so it's important to be aware of both.

Top Tax Write-offs for Instacart Shoppers

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

• Mileage: This is often the biggest deduction! For 2024, the standard mileage rate is 67 cents per mile for business use of your vehicle. Keep a detailed log of all miles driven for Instacart shopping (from leaving to pick up the order to delivering it). You can use apps to track this automatically.
• Phone Expenses: You likely use your phone for accepting batches, communicating with customers, and navigating. You can deduct the percentage of your phone bill that relates to business use. If you use your phone exclusively for Instacart, you can deduct the entire bill.
• Hot Bags & Shopping Supplies: The cost of insulated bags, reusable shopping bags specifically for Instacart, hand sanitizer, and other supplies directly related to your shopping activities are deductible.
• Software & Apps: If you use any apps or software to track your earnings, mileage, or expenses (like Stride Tax, Everlance, or QuickBooks Self-Employed), the cost of these subscriptions is deductible.

The 15.3% Self-Employment Tax Surprise

Many independent contractors are surprised to learn about 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 don’t pay self-employment tax on the entire net profit. You only pay it on 92.35% of your net earnings. The good news is that you can deduct one-half of your self-employment tax from your gross income on Form 1040, which reduces your overall income tax liability.

Closing Tip for Minnesota Residents

Tax laws can be complex, and it's easy to miss deductions. Consider keeping meticulous records of all your income and expenses throughout the year. Minnesota also offers resources for small business owners on the Department of Revenue website (https://www.revenue.state.mn.us/). If you're unsure about any aspect of your tax situation, consulting with a qualified tax professional (like myself!) can provide peace of mind and ensure you're maximizing your deductions and complying with all applicable laws. Good luck with your Instacart business and filing your 2024 taxes!