How Much to Set Aside for Side Hustle Taxes

Not tax advice. Rules depend on where you live and your full situation. Use this to get organized, then check with the IRS website, your state, or a tax professional.

You picked up a side gig: selling online, freelancing, driving, tutoring. The money lands in your account with nothing taken out. That's the part that catches people off guard at tax time.

Why side income feels different

With a regular job, your employer withholds tax from each paycheck. With most side income, nobody does. In the US, self-employment profit can owe income tax and self-employment tax (Social Security and Medicare, which is roughly 15.3% on most net earnings). The IRS generally expects people who will owe $1,000 or more to pay during the year through quarterly estimated payments.

You don't need to master all of that today. You need a habit: move a slice of every payment somewhere you won't spend it. That's much easier when side hustle money doesn't share an account with your personal spending; see Separate Business and Personal Money for a Side Hustle.

Picking a set-aside percentage

There's no single right number. Common rules of thumb people use are 25–30% of profit, a bit lower if your total income is small, higher if you're in a higher bracket or a high-tax state. Two notes:

• Base it on profit (income minus fees and business expenses), not gross sales. Tracking expenses can noticeably lower what you owe.
• Setting aside too much is a nicer problem than too little. Leftover money is just savings.

If you're unsure, pick a number, track it for a few months, and adjust once you see real totals or talk to a pro. If you also have a regular job and end up with a refund, What to Do With Your Tax Refund covers a simple plan for it.

A simple weekly routine

1. Log every payment, including the platform's fee.
2. Log expenses with a receipt or note (supplies, software, a share of your phone, etc.).
3. Log business miles if you drive for the work. The IRS sets a standard mileage rate each year; check the current one.
4. Move your set-aside % of that week's profit to a separate savings account.
5. Mark the quarterly deadlines on your calendar (usually mid-April, June, September, and January). Look up the exact dates each year. In December, Year-End Money Checklist for Freelancers and Side Hustles helps you compare your set-aside with what you may owe before the January payment.

Keep records you'd be comfortable showing someone

Dates, amounts, what it was for, and which gig it belongs to. A spreadsheet is enough. Keep receipts (photos are fine).

When filing time comes, the Self-Employed Tax Deductions Checklist lists expense categories to gather.

A tool if you want one

I made the Side Hustle Income & Expense Tracker ($7, Excel and Google Sheets). It logs income, fees, expenses and miles for up to 8 gigs, shows profit by month and by gig, and applies the set-aside % you choose so you know roughly what to move. It's a record-keeping sheet; it doesn't file anything or tell you what you owe.

New to budgeting overall? The free Starter Budget Sheet is a simple place to begin.

General information only, not tax, legal, or financial advice. Cedar & Ledger makes plain spreadsheet templates for money and small business: cedarandledger.vercel.app.

Getting ready to file? Use the tax prep checklist for side hustlers to gather everything in one folder.

Paying the last 2026 installment? Q4 Estimated Tax Payment: January 15, 2027 Checklist walks through it.

Try the free side hustle tax calculator (how much to set aside) →

Try the free side hustle profit per hour calculator →

Try the free mileage deduction calculator →

Related template: read about the side hustle tracker template

See all Cedar & Ledger templates

Also see: Self employment tax basics

Also see: Home office deduction basics

Also see: Quarterly estimated taxes 2027

Also see: Freelancer invoice