Side Hustle / Freelance Tax Estimator

Estimate your quarterly tax burden from freelance, gig work, or side hustle income, including self-employment and income taxes. Calculate your estimated self-employment tax (Social Security & Medicare) and additional income tax liability.

$

Gross Income minus Business Expenses.

$

Income from a regular job, if any.

%

Your estimated marginal state tax rate.

Most sole proprietors qualify for this 20% federal tax deduction on business income.

Disclaimer: This is a simplified estimate using the latest available federal tax data. It assumes the QBI deduction applies fully if selected. Consult a tax professional for accurate advice.

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Understanding Side Hustle Taxes

Why You Owe Extra Taxes

When you work for an employer (W2 job), they withhold income taxes, Social Security taxes, and Medicare taxes from your paycheck and pay the employer's share of Social Security and Medicare. When you're self-employed (freelancer, gig worker, side hustle), you are both the employer and the employee. This means you're responsible for paying:

  • Self-Employment Tax: This covers both the employee and employer portions of Social Security (12.4%) and Medicare (2.9%), totaling 15.3%. It's calculated on 92.35% of your net profit. (Note: The Social Security portion has an annual income limit).
  • Income Tax: Your side hustle profit is added to your other income (like from a W2 job) and taxed at your marginal federal and state income tax rates. Want to see how your brackets work? Check the Tax Bracket Modeler.

Because these taxes aren't automatically withheld, you generally need to make estimated tax payments quarterly throughout the year to avoid penalties.

The QBI Deduction

The Qualified Business Income (QBI) deduction is a significant tax break created by the 2017 Tax Cuts and Jobs Act. It allows eligible self-employed individuals to deduct up to 20% of their qualified business income from their taxes. This effectively reduces the income tax rate on your side hustle earnings.

How This Calculator Estimates Taxes

This tool provides a simplified estimate using the latest available federal tax data:

  1. Self-Employment Tax Calculation: It calculates 15.3% tax on 92.35% of your estimated profit, considering the Social Security wage base limit if you also have W2 income.
  2. Income Tax Calculation:
    • It estimates your total Adjusted Gross Income (AGI) by adding your W2 income and side hustle profit, then subtracting half of your calculated self-employment tax (a deduction you can take).
    • If eligible, it subtracts the QBI Deduction (20% of your qualified business income) from your AGI.
    • It subtracts the standard deduction for your filing status to find your taxable income.
    • It applies federal tax brackets to estimate your *total* federal income tax.
    • It compares this to the federal tax you would owe *without* the side hustle income to isolate the tax cost of the extra work.
  3. Quarterly Payments: The total estimated annual tax (SE Tax + Federal + State) is divided by four.

Important Considerations

This is a rough estimate. Your actual tax liability depends on many factors not included here, such as:

  • Itemized deductions vs. standard deduction.
  • Other deductions (like IRA contributions, student loan interest).
  • Tax credits (like child tax credit, education credits).
  • More complex Medicare surcharges at higher incomes. Check our IRMAA Optimizer if your income is high.
  • Specific state tax laws, which vary significantly.

Always consult the official IRS resources (like Form 1040-ES for estimated taxes) and consider speaking with a qualified tax professional for personalized advice, especially as your side hustle income grows.

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