Bag upgrades are permanent upgrades that increase how many items you can carry, from rupees and bombs to arrows and Deku Nuts.
Keep in mind that each bag has two upgrades, and they are always obtained in order, so you'll always get the first upgrade before the second. You can't skip ahead, so it doesn't matter which location you visit first: you'll receive whichever upgrade you're due.
There are 12 bag upgrades in total, two for each of the six types: Wallet, Deku Stick Bag, Deku Nut Bag, Deku Seed Bag, Bomb Bag and Quiver. This guide will show you how to get all of them.
Wallet Upgrades
Adult's Wallet
Head to the Skulltula House in Kakariko Village and talk to the Cursed Rich Man after finding 10 Gold Skulltulas. He'll reward you with the Adult's Wallet, which can hold up to 500 rupees.
Giant's Wallet
Keep collecting tokens and return to the Skulltula House once you have 30 Gold Skulltulas to receive the Giant's Wallet, which has a maximum capacity of 1000 rupees.
Deku Stick Bag Upgrades
Deku Stick Bag Upgrade #1
Enter the Lost Woods from Kokiri Forest and go left and then left again from the front entrance to find a Business Scrub. Purchase the upgrade from him and you're done.
Deku Stick Bag Upgrade #2
You'll need the Skull Mask for this one, which you can get during the Happy Mask Shop questline. Enter the Lost Woods from Kokiri Forest and head to the Forest Stage: from the Kokiri Forest entrance, go right > left > right > left > left, then drop down the hole in the ground surrounded by bushes.
Stand on the circular wooden platform in front of the Deku Scrubs while wearing the Skull Mask and wait until they notice you. Move closer to the big Deku Scrub and wait for it to notice you as well, and it'll give you a Deku Stick Bag upgrade.
Deku Nut Bag Upgrades
Deku Nut Bag Upgrade #1
Enter the Lost Woods from Kokiri Forest and look for the grotto next to the Sacred Grove entrance. To get there, go right > left > right > left > up > left, then break the rock with a bomb and drop down the hole. Purchase the upgrade from one of the Business Scrubs inside.
Deku Nut Bag Upgrade #2
You'll need the Mask of Truth for this one, which you get as the final reward of the Happy Mask Shop questline. Enter the Lost Woods from Kokiri Forest and head to the Forest Stage: from the Kokiri Forest entrance, go right > left > right > left > left, then drop down the hole in the ground surrounded by bushes.
Stand on the circular wooden platform in front of the Deku Scrubs while wearing the Mask of Truth and wait until they notice you. Move closer to the big Deku Scrub and wait for it to notice you as well, and it'll give you a Deku Nut Bag upgrade.
Deku Seed Bag Upgrades
Deku Seed Bag Upgrade #1
As child Link, enter the Lost Woods from Kokiri Forest and head right from the entrance until you see a target hanging from a tree. You need to shoot the bullseye three times with your slingshot to win the upgrade.
Deku Seed Bag Upgrade #2
Visit the Shooting Gallery in Hyrule Castle Town as child Link. You'll have to hit all 10 targets with your slingshot to win the Deku Seed Bag upgrade as the prize.
Bomb Bag Upgrades
Bomb Bag Upgrade #1
Go to Goron City and look for the Goron rolling around the area. You need to stop him exactly next to the sign, using either a Bomb or a Bomb Flower. Do it right and he'll reward you with the upgrade.
Bomb Bag Upgrade #2
Head to the Bombchu Bowling Alley in Hyrule Castle Town and complete level 2 of the minigame to get the upgrade as the reward.
Quiver Upgrades
Quiver Upgrade #1
Visit the Shooting Gallery in Kakariko Village as adult Link. You need to hit all 10 targets with your bow to win the upgrade.
Quiver Upgrade #2
Go to Gerudo Fortress and take on the Horseback Archery challenge. You need to score 1400 points or more to win this upgrade as the reward.
