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Side hustle taxes, explained simply

Updated November 2026 · 7 min read

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Side hustle money is taxable, and because nobody withholds tax from it, the bill can be a surprise. The basics aren't complicated once you know the few rules that matter, and setting aside a slice of every payout takes care of most of the stress.

This is general information from IRS sources, not tax advice. Rules depend on your situation; check IRS.gov or talk with a tax professional.

Yes, it's taxable, even without a form

You owe tax on side hustle income whether or not a company sends you a tax form. The IRS says you must report income on your return whether or not you receive a Form 1099-K.

Self-employment tax: the part people miss

When you work for yourself, you pay both halves of Social Security and Medicare. The IRS lists the self-employment tax rate as 15.3%: 12.4% for Social Security and 2.9% for Medicare. You generally owe it if your net earnings from self-employment are $400 or more for the year. It's charged on top of regular income tax. You can deduct the employer-equivalent half when figuring your adjusted gross income.

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Net earnings means income minus business expenses, so tracking your costs lowers the tax you owe.

Quarterly estimated payments

The IRS says you generally have to make estimated tax payments if you expect to owe $1,000 or more when you file. Payments are split across four periods during the year, generally due around April, June, September, and the following January; check the IRS estimated taxes page for exact dates. If you also have a regular job, raising your paycheck withholding can cover some or all of it instead.

Form 1099-K and other tax forms

• Form 1099-K comes from payment apps and online marketplaces. The IRS lists the reporting threshold as payments over $20,000 in more than 200 transactions, but you may get one below that, and the income is taxable either way.
• Form 1099-NEC is what many gig and freelance platforms or clients send for work you did as a contractor.
• Selling your own used stuff at a loss generally isn't taxable income, but keep records in case you need to show what you originally paid. Reselling for profit is taxable.

Common deductions

• Car use: business miles at the IRS standard mileage rate, or actual car expenses. See what delivery drivers really keep.
• Platform fees: marketplace, payment, and app fees.
• Inventory and supplies: what you paid for items you resold, shipping, and packing materials.
• Equipment and software used for the work, in proportion to business use.

How much to set aside

A common rule of thumb is to set aside 25% to 30% of your profit, not your gross income, for federal and state taxes. It's only a starting point: your real rate depends on your total income, your state, and your deductions. Moving that slice into a separate savings account each time you're paid makes tax season much easier.

Quick answers

Do I have to pay taxes on side hustle income?

Generally yes. Side hustle income is taxable even if you don't receive a tax form, and if your net self-employment earnings are $400 or more you generally owe self-employment tax as well as income tax.

What is the self-employment tax rate?

The IRS lists it as 15.3%: 12.4% for Social Security and 2.9% for Medicare, charged on net self-employment earnings.

Do I need to pay quarterly taxes on a side hustle?

The IRS says you generally need to make estimated payments if you expect to owe $1,000 or more when you file. Some people with a regular job raise their paycheck withholding instead.

How much should I set aside for side hustle taxes?

A common rule of thumb is 25% to 30% of your profit, but your actual rate depends on your income, state, and deductions.