# Side hustle taxes: what to set aside > Side income from gigs, selling or freelancing is taxable, and no one withholds for you. You may owe income tax plus self-employment tax of about 15.3% on net earnings once you net $400, and state tax. Many people set aside roughly 25% to 30% of each payment. If you’ll owe $1,000 or more, pay quarterly estimated taxes, usually in April, June, September and January. Track income and expenses in a separate account, and report all income, with or without a 1099. - URL: https://explained.page/side-hustle-taxes - Language: en - Last checked: 2026-10-29 - Watch the 1-minute animated guide: https://explained.page/watch?start=side-hustle-taxes ## Step by step 1. **Making money on the side?** Gig work, selling, freelancing or a small business all count as income. No one is taking taxes out for you, so plan ahead. 2. **Know the taxes.** Income tax, plus self-employment tax of about 15.3% for Social Security and Medicare on net earnings, once you net $400 or more. Plus state taxes in many states. 3. **Set aside a share of every payment.** Many people put aside roughly 25% to 30% of side income for taxes in a separate account. Your right amount depends on your situation. 4. **Pay estimated taxes during the year.** If you’ll owe $1,000 or more, the IRS expects quarterly payments, usually due in April, June, September and January. Missing them can mean penalties. 5. **Track income and expenses.** Keep a simple log of money in and business expenses, and use a separate bank account. Expenses lower the profit you pay tax on. 6. **Watch for 1099 forms, but report everything.** Clients and payment platforms may send 1099 forms. Even without a form, all business income must be reported. ## Checklist - Side income is taxable - Know self-employment tax (~15.3%) - Set aside 25–30% as a rough guide - Pay quarterly estimated taxes - Track income and expenses - Report all income, 1099 or not ## It’s taxable income Money from gig apps, freelancing, selling things you make, reselling, or a small business is generally taxable. Unlike a paycheck, no taxes are withheld. ## Taxes you may owe - **Income tax** on your profit. - **Self-employment tax,** about 15.3% of net earnings, covering Social Security and Medicare, once net earnings are $400 or more. - **State and local taxes** in many places. ## How much to set aside A common rule of thumb is 25% to 30% of side income, kept in a separate savings account. Your actual amount depends on your total income, deductions and state. A tax professional or IRS tools can help you estimate. ## Estimated taxes If you expect to owe $1,000 or more for the year, the IRS generally expects quarterly estimated payments (Form 1040-ES), usually due in April, June, September and January. Paying at least as much as last year’s tax (more for higher incomes) or 90% of this year’s usually avoids underpayment penalties. If you also have a job, increasing W-4 withholding can work instead. ## Keep records Use a separate bank account, log all income, keep receipts for expenses, and track business mileage. Expenses reduce taxable profit. ## 1099 forms Clients may send Form 1099-NEC, and payment platforms may send 1099-K. Report all business income even if no form arrives. ## Common questions ### Do I have to pay taxes on a small side hustle? Generally yes. Self-employment tax applies once net earnings reach $400, and income tax depends on your total income. Source page: https://explained.page/side-hustle-taxes/questions/do-i-have-to-pay-taxes-on-a-small-side-hustle ### What if I already missed estimated payments? Pay as soon as you can to reduce penalties, and adjust for the rest of the year. Source page: https://explained.page/side-hustle-taxes/questions/what-if-i-already-missed-estimated-payments ### How much should I set aside for taxes on side income? Many people use 25% to 30% as a rough guide. Your actual rate depends on total income, deductions and your state. Source page: https://explained.page/side-hustle-taxes/questions/how-much-should-i-set-aside-for-taxes-on-side-income ### What is self-employment tax? About 15.3% of net self-employment earnings, covering Social Security and Medicare, owed once net earnings reach $400. Source page: https://explained.page/side-hustle-taxes/questions/what-is-self-employment-tax ### Do I need to pay quarterly taxes on a side hustle? If you expect to owe $1,000 or more, the IRS generally expects quarterly estimated payments. Increasing W-4 withholding at a job can also work. Source page: https://explained.page/side-hustle-taxes/questions/do-i-need-to-pay-quarterly-taxes-on-a-side-hustle ### When are estimated tax payments due? Usually in April, June, September and January. Check the IRS calendar each year. Source page: https://explained.page/side-hustle-taxes/questions/when-are-estimated-tax-payments-due ### Do I have to report income without a 1099? Yes. All business income is reportable, whether or not you receive a form. Source page: https://explained.page/side-hustle-taxes/questions/do-i-have-to-report-income-without-a-1099 ### What records should I keep for my side business? Income records, receipts for expenses, mileage logs and bank statements, ideally in a separate business account. Source page: https://explained.page/side-hustle-taxes/questions/what-records-should-i-keep-for-my-side-business ## Official sources - [IRS: self-employed individuals tax center](https://www.irs.gov/) - [IRS: estimated taxes](https://www.irs.gov/) - [IRS: gig economy tax center](https://www.irs.gov/) To find your local office, search for: - "IRS Form 1040-ES" - "[your state] estimated tax payments" --- General information, not legal or professional advice. Rules differ by state. From explained.page (www.explained.page). Life’s stuff, explained simply.