Side Income Tax Estimator
Calculate self-employment tax, federal & state taxes on your side hustle income. Know exactly how much to set aside.
How Side Income Taxes Work
When you earn money from freelancing, gig work, or any self-employment activity, you're responsible for paying taxes that would normally be split with an employer. This includes self-employment tax (Social Security and Medicare) plus regular income taxes.
Self-Employment Tax (15.3%)
The biggest surprise for new freelancers is the self-employment tax. Unlike W-2 employees who split FICA taxes 50/50 with their employer, you pay the full 15.3%:
- Social Security: 12.4% on the first $168,600 (2024)
- Medicare: 2.9% on all earnings (plus 0.9% on income over $200,000)
Good news: You can deduct half of your SE tax when calculating income tax, slightly reducing your overall burden.
Federal Income Tax
Your side income is added to your W-2 income to determine your total taxable income. This means your side hustle is often taxed at your marginal rate — the highest bracket you reach. If your day job puts you in the 22% bracket, your side income is taxed at 22% (or higher if it pushes you into the next bracket).
State Income Tax
Most states tax self-employment income at your normal state income tax rate. Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
How to Reduce Your Side Income Taxes
Deduct Business Expenses
Track and deduct all ordinary and necessary business expenses:
- Equipment, software, and supplies
- Home office (simplified: $5/sq ft, up to 300 sq ft)
- Business mileage (67¢/mile for 2024)
- Professional services, subscriptions, training
- Health insurance premiums (if self-employed)
Contribute to Retirement
Self-employed retirement accounts let you defer taxes while saving:
- SEP-IRA: Contribute up to 25% of net self-employment income
- Solo 401(k): Up to $69,000 in 2024 (with employer + employee contributions)
- Traditional IRA: $7,000 limit ($8,000 if 50+)
The QBI Deduction
The Qualified Business Income (QBI) deduction lets you deduct up to 20% of qualified business income from your taxable income. This applies to most self-employed income below certain thresholds.
Frequently Asked Questions
Side income is subject to self-employment tax (15.3% on 92.35% of net earnings), plus federal income tax at your marginal bracket, plus any applicable state income tax. Most people need to set aside 25-35% of their side income for taxes.
Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) on net self-employment earnings up to $168,600 (2024). This covers both the employee and employer portions of FICA taxes that W-2 employees split with their employer.
If you expect to owe $1,000 or more in taxes, you should make quarterly estimated tax payments to avoid underpayment penalties. Payments are due April 15, June 15, September 15, and January 15 of the following year.
Yes! You can deduct ordinary and necessary business expenses like supplies, equipment, software, home office costs, mileage, and professional services. These deductions reduce your taxable income and lower both self-employment and income taxes.
You can deduct half of your self-employment tax (the employer-equivalent portion) when calculating your federal income tax. This deduction reduces your adjusted gross income (AGI) and lowers your overall tax liability.