Calculate net income from a side hustle after taxes and find your effective hourly rate.
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Net income = Gross revenue - Business expenses - SE tax (15.3%) - Income tax. Effective hourly rate = Annual net income / Annual hours (including admin). SE tax = net profit × 14.13% (after 50% deduction).
At 22% income tax + 15.3% SE tax on profits: roughly 60-65 cents per dollar net. Plan to set aside 30-35% of side hustle income for taxes.
Yes — any net side hustle profit over $400 is subject to 15.3% SE tax plus income tax. Set aside 30-35% from every payment for taxes.
Equipment, software, supplies, home office (if exclusive), vehicle mileage ($0.67/mile in 2024), professional development, marketing, accounting. Reduces taxable income.
Compare net hourly to your day job hourly. A side hustle making $25/hour gross might net $16-17 after taxes. Value your time including setup and admin.
If you expect to owe $1,000+ in taxes from the side hustle, pay quarterly estimates. First year mistake: owing $2,000+ at filing plus underpayment penalty.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.