Instacart Shopper Taxes in Vermont - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Instacart Shopper income taxable in Vermont?

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

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 taxable profit. Keep detailed records of all income received from Instacart (typically found in your Instacart earnings summary) and all related expenses.

Vermont Specific Rules: Vermont has a graduated income tax system. This means the tax rate you pay increases as your income increases. Your Instacart profit (after deducting business expenses on Schedule C) will be added to your other income, and Vermont will apply the appropriate tax bracket to determine your state income tax liability. Vermont also requires you to file a Vermont income tax return (Form INC) to report this income. You'll likely need to make estimated tax payments throughout the year if you expect to owe $500 or more in Vermont income tax.

Top Tax Write-offs for Instacart Shoppers

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

• Mileage: This is often the largest deduction! For 2024, the standard mileage rate is 67 cents per mile for business use of your vehicle. Keep a detailed mileage log (date, destination, business purpose, miles driven). You can use apps to help track this.
• Hot Bags & Shopping Equipment: The cost of insulated bags, shopping carts, phone mounts, or any other equipment specifically used for Instacart shopping is deductible.
• Phone Expenses: If you use your personal cell phone for Instacart (which is likely), you can deduct the percentage of the phone expense attributable to business use. Carefully track how much of your phone usage is for Instacart.
• Software & Apps: Expenses for apps or software used to manage your Instacart business (e.g., mileage tracking apps, 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 – a total of 15.3%. This is calculated on Schedule SE (Self-Employment Tax). However, 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 adjusted gross income on Form 1040, which reduces your overall tax liability.

Closing Tip for Vermont Residents

Tax laws can be complex, and this information is for general guidance only. I strongly recommend keeping meticulous records of all your Instacart income and expenses throughout the year. Consider using accounting software or working 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 Vermont tax regulations. Vermont offers resources on their Department of Taxes website (tax.vermont.gov) that you may find helpful. Wishing you a profitable and tax-efficient year as an Instacart shopper!