Side hustle

What It Means

A side hustle is paid work you do alongside a main job, school or caregiving, such as freelanceFreelancingWorking for yourself, selling your skills to different clients by the project or the hour instead of holding a long-term job with one employer. See more design, dog walking, delivery driving or selling things online. When you're paid as an independent contractor1099 contractorAn independent contractor whose pay a business reports on Form 1099-NEC; they're self-employed, so no tax is withheld and they owe self-employment tax. See more, no tax is taken out of the pay for you, which is why the IRS says you may need to make quarterly estimated payments. The IRS treats the income as taxable whether or not a tax form arrives, and once net earningsNet incomeWhat's left after everything is taken out: on a paycheck, pay after taxes and deductions; for a business, profit after all expenses and taxes. See more reach $400 in a year you must file a return and pay self-employment taxSelf-employment taxThe Social Security and Medicare tax self-employed people pay on their own profit: 15.3% of 92.35% of net earnings, owed once those reach $400 a year. See more.

How It Sounds at Home

• "I drive on weekends for some extra cash."
• "My side gig covers the car payment."
• "Don't forget to save for taxes on that."

The Breakdown

Worked example. Ana walks dogs on weekends and takes in $9,000 over the year. Leashes, treats, mileage and an app fee cost her $1,800.

Putting aside about $157 a month covers her estimate, and a tax professional can check the rate she guessed.

What the result means. Self-employment tax is how people who work for themselves pay Social Security and Medicare tax, and it comes on top of income tax. Because side income often arrives unevenly, moving the tax share into savings with each payment means the money is there when a quarterly estimated payment or the April bill comes due.

What moves the number

• Costs you can document, which lower the profit the tax is figured on.
• Your tax bracket, which depends on your main job's pay as well as the side income.
• How much you earn in total, since the Social Security part of the tax stops at a yearly wage limit.

Good to Know

The IRS gig economyGig workShort-term, on-demand jobs or sales, often found through an app or website, such as rides, deliveries, errands or selling goods; the IRS treats the pay as taxable income. See more tax center says side income is taxable even when no Form 1099 arrives, and that net earnings from self-employment of $400 or more mean you must file a return, even if the work is part-time or temporary. You may also need to make quarterly estimated tax paymentsQuarterly estimated taxesTax paid to the IRS in four installments during the year on income with no withholding, such as self-employment profit; due April, June, September and January. See more to avoid a penalty. As of 2026, under the One, Big, Beautiful Bill, the IRS says payment apps and online marketplaces, which it calls third party settlement organizations, must send a Form 1099-K only when your payments top $20,000 and your transactions top 200 in a calendar year, and that reporting threshold doesn't change what's taxable. Keep records of income and costs as you go, and ask a tax professional how the rules apply to your situation.

Related Terms and Categories

• Irregular income budgeting

  Planning spending and saving when your pay changes from month to month, such as freelance, commission or seasonal income, around your lean and average months.

• Passive income

  Income that keeps coming in without much ongoing work, like rent; for taxes, the IRS limits it to rentals and businesses you don't materially take part in.

• Gross income

  The full amount you earn before taxes and other deductions come out. For federal taxes, it's all income you receive unless a law exempts it.

• Net income

  What's left after everything is taken out: on a paycheck, pay after taxes and deductions; for a business, profit after all expenses and taxes.

• Sinking fund

  Money set aside in small, regular amounts for a known future cost, so the bill doesn't land on a single paycheck.

• Pay yourself first

  Moving a set amount into savings as soon as you're paid, before bills or spending, so saving comes first instead of from what's left.

Household money and budgeting