Instacart Shopper Taxes in Minnesota - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Minnesota

Navigating the lakes and cities of Minnesota as an Instacart shopper offers flexibility, but also brings tax responsibilities. As an independent contractor, earnings from Instacart are considered self-employment income, requiring careful attention during tax season.

The IRS requires all self-employed individuals, including Instacart shoppers, to report their income and pay taxes. This is typically done using Schedule C (Profit or Loss from Business) when filing your federal income tax return (Form 1040). Furthermore, earnings over $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions.

How Minnesota Handles Gig Worker Taxes

As a resident of Minnesota, filing a state income tax return is mandatory, even if no state income tax is ultimately owed. Minnesota utilizes a graduated income tax system, meaning the tax rate increases as your income rises. This means the more you earn, the higher percentage of your income will be taxed. Instacart income is considered part of your overall adjusted gross income (AGI) and is subject to these graduated rates. The primary form for self-employed individuals to report income and calculate tax liability is Minnesota Form M1, Individual Income Tax Return. You will likely also need Schedule M1SE, Self-Employment Earnings, to calculate your Minnesota self-employment tax. Minnesota also offers various credits and deductions that may reduce your tax burden, so exploring these options is crucial. It's important to note that Minnesota's tax laws can be complex, and staying updated on any changes is recommended. The Minnesota Department of Revenue provides comprehensive information and resources for taxpayers. Remember to keep accurate records of all income and expenses throughout the year to ensure accurate filing.

You can find more information and resources on the Minnesota Department of Revenue website: https://www.revenue.state.mn.us/

Top Tax Deductions for Minnesota Drivers

• Standard Mileage: The most popular deduction for Instacart shoppers. For the 2025 tax year, the standard mileage rate is 70 cents per mile. This simplifies expense tracking significantly.
• Tolls & Parking: While Minnesota doesn't have extensive toll roads, any tolls incurred while making deliveries are deductible. Parking fees directly related to Instacart deliveries are also deductible.
• Phone & Data Plan: If you use your personal phone for Instacart, you can deduct the percentage of your monthly bill that corresponds to business use. Keep a log of the time spent using your phone for work to justify the deduction.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts for safe navigation, and insulated hot/cold bags used exclusively for deliveries are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses (like gas, oil changes, repairs, and insurance) in the same tax 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.