Reselling sneakers, editing videos, mowing five lawns — the money is real, and above $400 for the year, so are the taxes. Here’s the teen-sized version of self-employment rules.
Does a Teen Side Hustle Really Get Taxed?
Yes — and differently than a W-2 job. Work for yourself and no employer withholds anything, so the IRS collects at filing time instead: 15.3% self-employment tax on net profit once you clear $400 for the year — a threshold most real side hustles pass by spring break.[1] The teen twist that surprises everyone: the $16,100 standard deduction shields your income tax, but not self-employment tax. A teen with $2,000 of mowing profit owes zero income tax but roughly $280 of SE tax.
Your state gets a say too
Everything above is federal. Self-employment tax is federal only — it funds Social Security and Medicare, and no state charges its own version. But most states tax the profit as ordinary income, and their rules are not the federal rules.
Nine states have no individual income tax at all — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. New Hampshire finished phasing out its tax on interest and dividends at the start of 2025, and Washington taxes only large long-term capital gains, not wages or hustle profit. If you live in one of those, the state layer is simply not there.
Everywhere else, look up two numbers on your own state’s department of revenue site before you assume you are done:
- The state filing threshold, which is frequently far lower than the federal standard deduction. It is entirely normal to owe zero federal income tax and still be required to file a state return.
- Whether your city or county taxes income. Ohio municipalities, several Pennsylvania and Michigan cities, New York City and a handful of others levy their own income tax with their own filing rules, and local returns are the ones people forget for years.
One more state-level trap for anyone selling physical goods: sales tax. When you sell through eBay, Etsy or a similar marketplace, the platform collects and remits sales tax for you under marketplace-facilitator laws. Sell directly — a table at a craft fair, a Venmo transaction for a flipped item — and the obligation may be yours, which can mean registering with the state. Ask before the first market, not after.
What Records Do I Keep?
- Every payment in: date, who paid, how much — including cash and Venmo. (Our free tracker is built for exactly this.)
- Every business expense: supplies, mower gas, packaging, platform fees — expenses cut the profit you’re taxed on, but only if written down.
- Set aside ~20–25% of profit in savings as you go. Tax time becomes a transfer, not a panic.
When Is the Money Actually Due?
This is the question that decides whether tax season is a transfer or a disaster, and the answer depends on how much you make.
The rule is a dollar amount, not an age. The IRS expects estimated tax payments during the year if you will owe $1,000 or more in federal tax after withholding and credits.[2] Below that, you simply pay when you file. For a teen whose only income is hustle profit, $1,000 of tax is roughly $7,100 of net profit — because self-employment tax runs about 14.1% of profit once the deduction built into the calculation is applied. So:
| Net profit for the year | What you do |
|---|---|
| Under $400 | No self-employment tax, and generally no return required on this income alone. Keep the records anyway — they are what documents Roth IRA eligibility. |
| $400 to about $7,000 | File a return and pay the self-employment tax with it, once, at the filing deadline. No quarterly payments required. |
| About $7,100 and up | Estimated payments are expected during the year, in four installments. |
The four federal deadlines are April 15, June 15, September 15, and January 15 of the following year, and they cover uneven slices of the calendar rather than true quarters.[2] Pay online through IRS Direct Pay; there is no form to mail.
Platforms (eBay, Etsy, StockX, PayPal) send a 1099-K only above $20,000 and 200 sales — but taxes are owed on profit with or without a form. One clean note: reselling your own old stuff for less than you paid isn’t taxable income — flipping items bought to resell is.
The Two-Sided Payoff
Filing a Schedule C sounds like a burden; it’s actually the receipt that makes your income official — and official earned income is what unlocks custodial Roth IRA room. The teen who tracks $3,000 of hustle profit, pays the ~$420 of SE tax, and Roths the rest is running the single most tax-efficient wealth pipeline in America. Full adult-level rules: Side Income and Self-Employment Tax; the filing walk-through: How a Teen Fills Out a W-4.
There is a version of this that is better still. If a parent runs a business, employing your own child is not the same thing as your child running a side hustle — the wages are a deductible business expense to the parent, they are earned income to the child, and in a sole proprietorship or a partnership where every partner is a parent they are exempt from Social Security and Medicare tax while the child is under 18. That is the same Roth pipeline without the 15.3% toll. The entity rules decide all of it, and they are the part most advice online gets wrong: Hiring Your Child in the Family Business.
Where to go next: How a Teen Tracks Side-Hustle Income — the record-keeping the $400 rule depends on; Side Income & Self-Employment Tax — the adult version of the same tax picture; How a Teen Fills Out a W-4 — using withholding instead of estimated payments; and the Teen Self-Employment Ledger — the ledger that flags the threshold for you.
References & Resources
- IRS: Self-Employed Individuals Tax Center — The $400 net-earnings threshold, the 15.3% self-employment tax rate, and Schedule C basics.
- IRS: Estimated Taxes — The $1,000 threshold, the four payment periods (April 15, June 15, September 15, and January 15 of the following year), the prior-year safe harbor, and the no-liability-last-year exception to the underpayment penalty.
- IRS: Gig Economy Tax Center — Platform income rules and Form 1099-K reporting.
- IRS Direct Pay — Making an estimated payment from a bank account, no form required.
- Federal figures are for 2026 and state rules vary; thresholds change every year. Confirm at IRS.gov and with your own state’s department of revenue before filing.