Instacart Shopper Taxes in Rhode Island - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Rhode Island?

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

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, reducing your taxable income. The net profit (income minus expenses) from Schedule C is then reported on your Form 1040.

Rhode Island Requirements: Rhode Island has a graduated income tax system. This means the tax rate you pay increases as your income increases. You will report your federal adjusted gross income (AGI) and any applicable Rhode Island adjustments on Form RI-1040. The net profit calculated on your federal Schedule C will flow to your Rhode Island return and be taxed according to the current Rhode Island tax brackets. It's crucial to accurately report your income to avoid penalties.

Top Tax Write-offs for Instacart Shoppers

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

• Mileage: This is a big one! The IRS standard mileage rate for 2024 is 67 cents per mile for business use. Keep a detailed log of all miles driven for Instacart deliveries (from leaving to pick up the order to delivering it). You can use apps to track this automatically.
• Phone Expenses: If you use your personal cell phone for Instacart work (scheduling, communication with customers, using the app), you can deduct the percentage of the phone bill attributable to business use.
• Hot Bags & Shopping Equipment: The cost of insulated bags, carts, or other equipment specifically used for Instacart shopping is deductible.
• Software & App Fees: Any fees you pay for tax preparation software or other software directly related to managing your Instacart business are deductible.

Important: Keep receipts and documentation for all expenses!

The 15.3% Self-Employment Tax Surprise

Being self-employed means you're responsible for both the employer and employee portions of Social Security and Medicare taxes. This combined tax is called Self-Employment Tax and is currently 15.3% (12.4% for Social Security up to the annual wage base, and 2.9% for Medicare). You'll calculate this on Schedule SE (Self-Employment Tax).

You only pay self-employment tax on profits over $400. The good news is that you can deduct one-half of your self-employment tax from your gross income on Form 1040, which helps reduce your overall tax burden.

Closing Tip for Rhode Island Residents

Navigating self-employment taxes can be complex. I strongly recommend keeping meticulous records of your income and expenses throughout the year. Consider using accounting software designed for freelancers or consulting with a qualified tax professional (like myself!) to ensure you're taking all eligible deductions and complying with both federal and Rhode Island tax laws. Don't wait until tax season to start organizing – proactive planning will save you time, money, and potential stress. Good luck, and happy shopping!