Instacart Shopper Taxes in Tennessee - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Tennessee

Navigating the vibrant streets of cities like Nashville and Memphis 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 primarily done using Schedule C (Profit or Loss from Business) when filing Form 1040. Crucially, this income is also subject to self-employment tax, covering both Social Security and Medicare contributions, which are not automatically withheld from your Instacart payments.

How Tennessee Handles Gig Worker Taxes

Tennessee stands out as a state with no state income tax, a benefit for all residents, including gig workers. However, this does not exempt Instacart shoppers from federal income tax obligations. All income earned through Instacart is subject to federal taxes, and proper reporting is essential to avoid penalties. Tennessee does not have a specific classification for "gig workers" beyond the standard self-employed individual. This means the same rules apply to Instacart shoppers as they do to any other independent contractor operating within the state. Given Tennessee's relatively low cost of living compared to other states, maximizing deductions becomes even more important to minimize your overall tax liability. Many Tennessee shoppers utilize the income from platforms like Instacart to supplement income from traditional employment, and understanding the interplay between W-2 and 1099 income is vital. The state does require businesses operating within Tennessee to collect and remit sales tax, but this is generally handled by Instacart itself, not the individual shopper. It's important to keep accurate records of all earnings and expenses throughout the year to ensure accurate tax filing.

For more information on Tennessee business tax regulations, please visit the Tennessee Department of Revenue.

Top Tax Deductions for Tennessee Drivers

• Standard Mileage: The most popular deduction for Instacart shoppers. For the 2025 tax year, the standard mileage rate is 70 cents per mile. Tennessee's relatively stable gas prices make the standard mileage rate a particularly attractive option for many shoppers, simplifying expense tracking.
• Tolls & Parking: While Tennessee doesn't have extensive toll road networks, any tolls incurred during deliveries are deductible. Parking fees directly related to Instacart deliveries are also deductible.
• Phone & Data Plan: If you use your phone for business purposes (accepting orders, navigating, communicating with customers), you can deduct the percentage of your monthly bill attributable to business use.
• Vehicle-Related Costs: Expenses like car washes to maintain a professional appearance, phone mounts for safe navigation, 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, repairs, insurance) in the same tax year. Choose the method that yields the larger deduction.

Understanding the 15.3% Self-Employment Tax

Self-employment tax is a combined tax for Social Security and Medicare. As an Instacart shopper, you are responsible for paying both the employer and employee portions of these taxes, totaling 15.3% on net earnings over $400. Instacart and other gig platforms do not withhold these taxes from your earnings, so it’s crucial to plan for this expense by setting aside funds throughout the year, or making estimated tax payments quarterly to the IRS.