Instacart Shopper Taxes in Michigan - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Michigan

Navigating the Great Lakes State while delivering groceries through Instacart offers flexibility, but also brings tax responsibilities. As an independent contractor for Instacart in Michigan, understanding how to properly report your earnings and claim deductions is crucial for a smooth tax season.

The IRS requires all Instacart shoppers to report their income on Schedule C (Profit or Loss From Business) as self-employment income. This means you’re not only responsible for income tax, but also self-employment tax, which covers Social Security and Medicare taxes that are typically withheld from a traditional employee’s paycheck. If your net earnings (income minus business expenses) exceed $400, you will be subject to the 15.3% self-employment tax.

How Michigan Handles Gig Worker Taxes

As a resident of Michigan, filing a state income tax return is required, even if no Michigan income tax is due. Michigan operates under a flat income tax rate of 4.05% for the 2025 tax year. This applies to all levels of taxable income. Instacart shoppers, being independent contractors, will report their self-employment income on Schedule 1 of Form MI-1040, Michigan's Resident Income Tax Return. The primary form for self-employed individuals is Form MI-1040, along with Schedule SE (Self-Employment Tax) to calculate your Michigan self-employment tax liability. Michigan also offers various credits and deductions that may be applicable, such as the Earned Income Tax Credit. It’s important to keep accurate records of all income and expenses throughout the year to ensure accurate reporting. Michigan does not have a separate tax form specifically for gig workers; you use the standard individual income tax forms, but the Schedule C income flows through to your state return. Remember to consider estimated tax payments throughout the year to avoid penalties at tax time, especially if your income is substantial. The Michigan Department of Treasury provides comprehensive resources and guidance for taxpayers, including information specific to self-employment.

You can find more information and resources on the Michigan Department of Treasury website: Michigan Department of Treasury

Top Tax Deductions for Michigan Drivers

• Standard Mileage: The most popular deduction for Instacart shoppers. The 2025 rate is 70 cents per mile. Given Michigan's diverse terrain and potential for significant mileage, especially in areas like the Upper Peninsula or between major cities like Detroit and Grand Rapids, this rate can add up quickly.
• Tolls & Parking: While Michigan doesn't have extensive toll roads, parking fees incurred while making deliveries are deductible. Keep receipts for parking at grocery stores or in designated delivery zones.
• Phone & Data Plan: The portion of your cell phone and data plan used for Instacart work is deductible. If you use your phone 60% for Instacart, you can deduct 60% of the bill.
• Vehicle-Related Costs: Expenses like car washes (to maintain a professional appearance), phone mounts, insulated hot/cold bags, and even hand sanitizer are deductible as business expenses.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas, oil changes, or repairs in the same year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

This tax comprises two components: 12.4% for Social Security and 2.9% for Medicare. Unlike traditional employment, Instacart and other gig platforms do not withhold these taxes from your earnings. Therefore, it’s your responsibility to calculate and pay this tax, typically through estimated tax payments made quarterly to the IRS. Failing to do so can result in penalties.