Side Hustle Taxes: What You Need to Know Before You Owe
Freelancing, selling online, or driving for a rideshare? Here's how to handle taxes so April doesn't surprise you.
If you earned more than $400 from self-employment in 2025, you owe taxes on it. And unlike W-2 income, nobody's withholding for you. Here's how to stay ahead.
The Self-Employment Tax
Beyond income tax, you'll owe 15.3% in self-employment tax (Social Security + Medicare). On W-2 income, your employer pays half. When you're self-employed, you pay both halves.
Quarterly Estimated Taxes
If you expect to owe $1,000+ in taxes, the IRS wants quarterly payments (April 15, June 15, September 15, January 15). Miss them and you'll face underpayment penalties.
Deductions You're Probably Missing
- Home office: Simplified method gives you $5/sq ft, up to 300 sq ft ($1,500 max).
- Mileage: 67 cents/mile in 2026 for business driving.
- Equipment: Computers, phones, software — anything used primarily for business.
- Health insurance: Self-employed? Premiums are fully deductible.
- Retirement contributions: SEP-IRA lets you shelter up to 25% of net earnings.
The Simple System
Set aside 25-30% of every side hustle payment in a separate savings account. Use TrendingBudget to tag side hustle income and expenses for easy tax prep. When quarterly taxes come due, the money's already there.
TrendingBudget Team
Practical financial advice from people who actually budget.