Estimate your tax liability for recreational earnings
Annual salary, etc. (helps determine tax bracket)
Single
Married Filing Jointly
Head of Household
Tax Summary
Estimated Marginal Tax Rate:0%
Tax Due on Hobby Income:$0.00
Take-Home (After Tax):$0.00
*Note: This calculation assumes federal income tax rates for 2024. Hobby expenses are generally not deductible for federal tax purposes under current TCJA laws (2018-2025).
Understanding Hobby Income Tax
If you earn money from a side activity that is not conducted as a professional business, the IRS classifies that income as Hobby Income. Unlike business income, you generally cannot deduct expenses related to your hobby to offset the income on your federal tax return. This means you are typically taxed on the gross revenue earned.
Hobby vs. Business: What's the Difference?
The IRS uses specific guidelines to determine if an activity is a hobby or a business. The primary factor is whether you carry out the activity with a profit motive. The "3-out-of-5" rule is a common benchmark: if your activity reported a profit in at least three of the last five tax years, the IRS generally presumes it is a business.
Hobby Income: Reported on Schedule 1, Form 1040. Not subject to self-employment tax.
Business Income: Reported on Schedule C. Subject to self-employment tax (15.3%), but allows for expense deductions.
Tax Calculation Example
Suppose you are a Single filer with a full-time job paying $60,000 (putting you in the 22% marginal tax bracket). If you sell $2,000 worth of handmade crafts as a hobby:
Item
Value
Hobby Revenue
$2,000
Marginal Tax Rate
22%
Total Federal Tax
$440
Key IRS Rules to Remember
1. Reporting: All income, even if it's only a few hundred dollars, must be reported to the IRS. You do not need a 1099-K to be required to report earnings.
2. No Deductions: Under the Tax Cuts and Jobs Act, miscellaneous itemized deductions (which included hobby expenses) are suspended until 2025.
3. Self-Employment Tax: One benefit of hobby classification is that you do not pay the 15.3% Social Security and Medicare taxes required for freelancers and business owners.
function calculateHobbyTax() {
var hobbyIncome = parseFloat(document.getElementById('hobbyIncome').value) || 0;
var otherIncome = parseFloat(document.getElementById('otherIncome').value) || 0;
var filingStatus = document.getElementById('filingStatus').value;
var totalIncome = hobbyIncome + otherIncome;
var bracket = 0;
var taxDue = 0;
// 2024 Federal Tax Brackets (Simplified Marginal logic for the hobby portion)
if (filingStatus === 'single') {
if (otherIncome > 609350) bracket = 0.37;
else if (otherIncome > 243725) bracket = 0.35;
else if (otherIncome > 191950) bracket = 0.32;
else if (otherIncome > 100525) bracket = 0.24;
else if (otherIncome > 47150) bracket = 0.22;
else if (otherIncome > 11600) bracket = 0.12;
else bracket = 0.10;
} else if (filingStatus === 'married') {
if (otherIncome > 731200) bracket = 0.37;
else if (otherIncome > 487450) bracket = 0.35;
else if (otherIncome > 383900) bracket = 0.32;
else if (otherIncome > 201050) bracket = 0.24;
else if (otherIncome > 94300) bracket = 0.22;
else if (otherIncome > 23200) bracket = 0.12;
else bracket = 0.10;
} else { // Head of Household
if (otherIncome > 609350) bracket = 0.37;
else if (otherIncome > 243725) bracket = 0.35;
else if (otherIncome > 191950) bracket = 0.32;
else if (otherIncome > 100500) bracket = 0.24;
else if (otherIncome > 63100) bracket = 0.22;
else if (otherIncome > 16550) bracket = 0.12;
else bracket = 0.10;
}
taxDue = hobbyIncome * bracket;
var takeHome = hobbyIncome – taxDue;
document.getElementById('resBracket').innerText = (bracket * 100).toFixed(0) + '%';
document.getElementById('resTaxDue').innerText = '$' + taxDue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTakeHome').innerText = '$' + takeHome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('hobbyResult').style.display = 'block';
}