Instacart Shopper Taxes in Vermont - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Instacart Shoppers in Vermont

Navigating the Green Mountains as an Instacart shopper offers flexibility, but it also comes with tax responsibilities. As an independent contractor, earnings from Instacart are considered self-employment income, requiring careful attention to both federal and Vermont state tax regulations.

The IRS requires all self-employed individuals, including Instacart shoppers, to report their income and pay taxes on it. This is typically done using Schedule C (Profit or Loss from Business) when filing Form 1040. Furthermore, earnings exceeding $400 necessitate the payment of self-employment taxes, covering both Social Security and Medicare contributions, which are not automatically withheld from your Instacart payouts.

How Vermont Handles Gig Worker Taxes

As a resident of Vermont, a state income tax return is required, regardless of income level. Vermont operates on a graduated income tax system, meaning the tax rate increases as your income rises. This means the more you earn through Instacart, the higher percentage of your income will be taxed. Vermont considers income earned from Instacart as self-employment income, subject to both state income tax and potentially, Vermont’s version of self-employment tax, which is calculated as part of your overall income tax liability. The primary form for self-employed individuals to report income and calculate tax liability is Form INC-100, Individual Income Tax Return. Vermont also requires Schedule SE-V, Self-Employment Income, to be filed alongside Form INC-100. It’s important to note that Vermont conforms to many federal tax rules, but there can be differences, particularly regarding deductions and credits. Vermont also has a use tax on items purchased out-of-state, which could be relevant if you purchase supplies for your Instacart work online from vendors outside of Vermont. Staying current with Vermont Department of Taxes updates is crucial. You can find comprehensive information and resources on the Vermont Department of Taxes website: https://tax.vermont.gov/

Top Tax Deductions for Vermont Drivers

• Standard Mileage: The most popular deduction for Instacart shoppers. The 2025 rate is 70 cents per mile. Given Vermont’s rural landscape and potential for longer delivery distances, maximizing this deduction can significantly reduce your tax burden.
• Tolls & Parking: While Vermont doesn’t have extensive toll roads, any parking fees incurred directly while performing Instacart deliveries are deductible.
• Phone & Data Plan: The portion of your monthly phone and data plan used for business purposes (tracking orders, communicating with customers, using navigation apps) is deductible. Keep detailed records of business usage.
• Vehicle-Related Costs: Expenses like car cleaning supplies, phone mounts, insulated hot/cold bags specifically used for deliveries, and even a portion of vehicle registration fees can be deductible.

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.