What does my side hustle really pay per hour after tax, and how much faster does it get me to FI?
Turn what a side hustle brings in into what you keep after self-employment tax and income tax, per hour and per year, and see how much sooner it gets you to financial independence.
Filing status
YOUR REAL HOURLY PAY
$13.61/hr
At these inputs, $12,000 of sales less $2,400 of costs leaves $9,600 of profit. Self-employment tax takes $1,356 and income tax $1,713, so you keep $6,531, 68% of the profit: $13.61 an hour after tax, against $20.00 before. That includes the 20% business income deduction, $1,784 off your taxable income. Saving 50% of what you keep, $3,265 a year, gets you to financial independence 5 months sooner.
Profit a year
$9,600
Self-employment tax
$1,356
Income tax
$1,713
You keep
68%
UNDERSTAND YOUR RESULT
Where a year of side income goes
Of $12,000 in sales, $2,400 covers costs, $1,356 goes to self-employment tax and $1,713 to income tax, leaving $6,531.
What an hour pays: the side hustle against your day job
Side hustle, before tax
20
Side hustle, after tax
13.6
Day job, before tax
69.7
Day job, after tax
53.1
The side hustle pays $13.61 an hour after tax; your $145,000 day job pays $53.06 an hour after tax over a 2,080-hour year.
How much of the profit you keep as it grows
$3k
68%
$6k
68%
$10k
68%
$12k
68%
$24k
68%
$48k
69%
$96k
67%
You keep 68% of a $3,000 profit and 67% of a $96,000 one on top of $145,000 of pay; yours is highlighted.
What moves the needle
Each row re-runs the calculation with one change. Click to apply.How it's computed
FORMULA
Profit = (sales − costs) × 12
Self-employment tax = 12.4% × min(92.35% × profit, $184,500 − wages) + 2.9% × 92.35% × profit + 0.9% above the Additional Medicare threshold
Income tax = tax on (wages + profit − half the self-employment tax − standard deduction − 20% business income deduction) − tax on wages
You keep = profit − self-employment tax − income tax − state tax
- Federal income tax uses the 2026 brackets and standard deduction for single filers, with your day-job pay as the base. Other income, other deductions and credits are not included.
- Self-employment tax is 15.3% on 92.35% of the profit: 12.4% for Social Security up to $184,500 of wages and profit combined in 2026, and 2.9% for Medicare, plus 0.9% Additional Medicare Tax above $200,000 ($250,000 for a joint return) of combined pay. You owe it once net earnings reach $400, and you deduct half of it from income.
- The 20% deduction for qualified business income is taken while taxable income is at or under $201,750 for single filers in 2026. Above that, it depends on the business type and wages paid, so it is left out and the tax shown is an upper estimate.
- Your time is counted in hours you enter, and the day-job comparison assumes a 2,080-hour year (40 hours × 52 weeks). State tax is included only if you enter a rate. Years to financial independence use the FIRE calculator’s assumptions: 7% before inflation, 3% inflation, a 4% withdrawal rate, spending unchanged.
- The profit is treated as steady all year. Estimated tax payments, retirement plans for the self-employed (such as a solo 401(k)) and health insurance deductions are not modelled.
WORKED EXAMPLE · SAMPLE NUMBERS
($1,000 − $200) × 12 = $9,600. Self-employment tax: 92.35% × $9,600 = $8,866 of net earnings, which owes $1,356; half, $678, comes off income. Federal income tax rises from $23,534 to $25,247 after a $1,784 business income deduction, so $1,713 more. You keep $9,600 − $1,356 − $1,713 = $6,531, which over 480 hours is $13.61 an hour.
SOURCES
[1]Topic no. 554, Self-employment taxInternal Revenue Service[2]Qualified business income deductionInternal Revenue Service[3]Rev. Proc. 2025-32: 2026 inflation-adjusted tax items (brackets, standard deduction, QBI thresholds)Internal Revenue Service, 2025[4]Estimated taxesInternal Revenue Service[5]Topic no. 560, Additional Medicare TaxInternal Revenue ServiceHSBuilt by Hussain Sehorewala · checked against worked examples · Sep 29, 2026
Keep this number honest as your life changes.
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Questions about this result
Twice, in two ways. It is added to your other income and taxed at your bracket, and it also owes self-employment tax, 15.3% on 92.35% of the profit, once your net earnings from it reach $400 (IRS). For example, $20,000 of profit on top of a $145,000 salary in 2026 owes about $2,826 of self-employment tax and $3,569 of federal income tax after the 20% business income deduction, so about 68% of the profit is left.
It is your Social Security and Medicare tax when you work for yourself: an employee pays half and the employer half, and you pay both. Social Security tax (12.4%) applies up to $184,500 of wages and profit combined in 2026, Medicare (2.9%) has no limit, and you deduct half of the total from your income.
Most sole proprietors can deduct 20% of their qualified business income from taxable income. In 2026 the full deduction is available while taxable income is at or under $201,750 ($403,500 on a joint return); above that, limits based on the type of business and the wages it pays apply. This page leaves the deduction out above the threshold, which overstates the tax.
Generally yes, if you expect to owe $1,000 or more when you file, after withholding and credits (IRS). Some people raise their day-job withholding instead. The IRS Tax Withholding Estimator can work out how much for your whole return.
Ordinary and necessary costs of running it, such as supplies, software, platform fees and business mileage. This page takes the costs you enter as given; keep records, and ask a tax professional what applies to yours.
Only if you enter a state rate, which is applied to the profit after the deductible half of self-employment tax. State rules differ, and some states tax self-employment income differently.
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