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It Pays More To Have a Side Gig If You Make More Money

I’m a strong believer in having a side gig. There are lots of benefits including extra income and security should something bad happen at work, but it’s clear to me that having a side gig is worth the time.

I started this blog over two years ago and when I moved to California, it allowed me to be self-employed for over two months. One big problem for me was paying estimated quarterly taxes, which has been taking nearly 40% of my side income. That’s a lot for someone who is trying to pay off student loan debt and save, but it’s not enough of a deterrent to stop doing it. I still get a whole lot more money than I make from watching tv and playing video games.

I’m always looking for ways to reduce my taxable income (without reducing my actual income), and even after taking some nice tax deductions, there’s no way of getting around paying your fair share. Well, I guess there is, but I don’t cheat on my taxes!

I recently came to the conclusion that having a side gig is great, but if you make over $100,000, it’s even more worth it!

Sure, it sounds counter-intuitive because someone making $60,000 with $30,000 in side income makes 50% more while someone making $100,000 with the same side gig only makes 30% more. While the percentage of additional income is greater and probably more valuable to the person making less, that additional $30,000 actual pays the wealthier person more. How?

There are some external factors at play, namely taxes. You see, $30,000 is just the additional income. It doesn’t take taxes into account. I can already hear you screaming about someone making $100,000 being in a higher tax bracket, but guess what? It doesn’t matter.

With $100,000 in income, you are in the 28% tax bracket, while with a $60,000 income you are in the 25% tax bracket. Big deal, and here’s why.

The tax brackets don’t take Social Security taxes into account. At 10.4% of income (a reduction from 12.4% in previous years), it matters much more than the 3% tax bracket increase. We pay Social Security tax on income up to $106,800, and after that, we pay nothing.

The person making $100,000 plus an additional $30,000 gets $23,200 ($130,000-$106,800) that gets taxed at the normal $28% tax bracket (plus 2.9% medicare tax). For the person making $60,000, all $90,000 of their income gets taxed at the 25% tax rate, and in addition to the 2.9% medicare tax, has the 10.4% Social Security tax added on to the side gig income.

So let’s round up:

The person who makes $100,000 gets to keep just over $20,000 of their $30,000 side gig income after all taxes, or about 33% to taxes.

The person who makes $60,000 gets to keep to keep just over $18,000 of their side gig income. That comes out to 39.9% of that $30,000 to taxes.

We can clearly see that the person making more makes more from the side gig! At anything over $106,800, side gig becomes even more worth the time effort because you get to keep more of your hard-earned money!

Readers, do you think “richer” people should work even harder to make their side gigs work because it’s worth more to them?



  1. This clearly makes a lot of sense now that I have read it through completely. Though my question is that I really truly see the benefit in a person makes over that threshold but if you aren’t some wont think its worth it. But then again its all perspective. Not sure many reading want to actually get a side gig in the first place.

  2. Great points! I would have thought anyway that if you’re making extra money, you still end up with extra even after taxes.

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