Is the side hustle actually worth it?

It stacks. Your salary already used up your standard deduction and the low tax brackets, so side income is taxed from its first dollar at your highest marginal rate — and it also owes 15.3% self-employment tax, which your salary never paid because your employer covered half. A person in the 22% federal bracket with a 5% state rate keeps roughly 60 cents of each side-hustle profit dollar, before platform fees and expenses are even counted.

Yes — all of it is taxable income regardless of whether any form shows up. The paperwork thresholds changed for 2026 (clients issue a 1099-NEC only above $2,000, and payment apps issue a 1099-K only above $20,000 and 200 transactions), but those thresholds decide who sends forms, not what you owe. The one real floor is self-employment tax, which only applies once net self-employment earnings reach $400 — regular income tax applies from the first dollar either way.

It is both halves of Social Security and Medicare. An employer normally pays 7.65% and withholds your matching 7.65%; when you are the business, you pay both — 12.4% Social Security plus 2.9% Medicare on 92.35% of your net profit. Two softeners: half of it is deductible against income tax, and if your salary is already near the Social Security wage base ($184,500 in 2026), your W-2 wages use up that base first, so the side gig may owe only the Medicare part.

The ordinary and necessary costs of earning it: supplies and materials, software subscriptions, platform and payment-processing fees, business mileage at the IRS standard rate, a home-office share if you qualify, and equipment. You deduct these even if you take the standard deduction on your personal return — business expenses come off on Schedule C before the profit ever reaches your 1040. Keep records; the deduction is only as good as the receipt behind it.

Work it out from your marginal stack rather than a folk number: self-employment tax of about 14.1% of profit, plus your top federal bracket, plus your state rate. For many salaried people that lands between 25% and 40% of profit. This page computes the exact share of each incoming payment to park given your salary and state; if the side income is becoming substantial, quarterly estimated payments stop an April surprise from becoming an April penalty.