Side Business Tax Calculator

Calculate total taxes on side business income combined with your W-2 job.

By Konstantin Iakovlev · Updated September 2026 · Source: IRS — Gig Economy Tax Center

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Total Tax on Side Income

$6,265.06

Effective Rate

31.3%

Quarterly Payment

$1,566.26

Tax Breakdown

Net self-employment income$20,000.00
Self-employment tax (15.3%)$2,825.91
Additional federal income tax$3,439.15
Total tax on side income$6,265.06
Quarterly estimated payment$1,566.26

Use the Side Business Tax Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Side income comes with a tax bill that the IRS expects you to anticipate, not discover in April. Estimating what you owe as the money comes in lets you set funds aside, plan around the obligation, and skip the unpleasant surprise that catches many gig workers off guard.

The estimate follows a simplified path: it works out self-employment tax on your profit (15.3% on 92.35% of revenue minus expenses, covering Social Security and Medicare), then runs your W-2 salary through the 2026 federal brackets after the standard deduction twice, once with the side profit (less half the SE tax) and once without, and counts the difference as the income tax the side business adds. State income tax is not included. That result is a useful starting figure for planning, but it stands in for, rather than replaces, advice from a tax professional who knows your full situation.

Careful records throughout the year are what make any of this reliable, so log income and deductible expenses as they happen instead of reconstructing them later. Self-employment tax is the line people most often shortchange, and underestimating it is exactly how unexpected bills and penalties show up at filing time.

Example: Freelance Graphic Designer with a W-2 Job

  1. 1 Input: $15,000 of freelance graphic design revenue, $2,000 of deductible expenses (software subscriptions, website hosting), a $60,000 W-2 salary, filing single.
  2. 2 Self-employment tax: ($15,000 − $2,000) × 92.35% × 15.3% = $1,836.84. Half of it, $918.42, is deducted in figuring income tax.
  3. 3 Income tax: with the side business, taxable income is $60,000 + $13,000 − $918.42 − $16,100 standard deduction = $55,981.58, which the 2026 single brackets tax at $7,027.95. Without it, $43,900 is taxed at $5,020.00. The side business adds $2,007.95, partly at 12% and partly at 22%.
  4. 4 Result: $3,844.79 of total tax on the side income, 29.6% of the $13,000 profit. That is $961.20 a quarter, or about $320 a month to set aside. State tax and the QBI deduction are not included.

Source: IRS — Gig Economy Tax Center · Last updated: September 2026

Frequently Asked Questions

How much tax do I pay on side business income?
Side business income is taxed at your marginal income tax rate (10-37%) plus self-employment tax of 15.3% on 92.35% of profit. If your W-2 job puts you in the 22% bracket, your side income faces about 34.6% in combined federal taxes: 14.1% self-employment tax plus 22% income tax on the profit left after deducting half of it, before any state tax.
Do I need to pay quarterly taxes on side income?
Yes, if you expect to owe $1,000 or more in taxes for the year from side income. Quarterly estimated payments are due April 15, June 15, September 15, and January 15.
What can I deduct from side business income?
Common deductions include home office expenses, equipment, supplies, mileage, software subscriptions, professional development, and health insurance premiums, though the self-employed health insurance deduction is not allowed for any month you were eligible for an employer-subsidized plan, including one through your W-2 job. The qualified business income (QBI) deduction of up to 20% may also apply; the calculator does not subtract it.

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