Enter your gross income and expenses on the left to instantly see your 2026 tax status.
You Owe An Estimated
SE Tax
Set aside per quarter
Below SE Tax Threshold ✓
Net Earnings
Self-Employment Threshold ($400 net)
1099-NEC Threshold ($600 gross)
1099-K Reporting Threshold
⚠️ The IRS hobby-loss rule looks for 3 profitable years out of 5. Fewer than that may affect expense deductions.
📋 You've crossed the 1099-K reporting threshold. Your payment platform must send you a Form 1099-K.
What This Means
Based on the numbers you entered and current 2026 IRS thresholds.
Net earnings of fall below the SE tax threshold — no self-employment tax applies at this level. With no profit history recorded yet, the IRS hobby-loss rule has not come into play.
Net earnings of fall below the SE tax threshold — no self-employment tax applies at this level. With profitable years on record, the hobby-loss rule is well-supported.
Net earnings at this level result in an estimated in self-employment tax ( per quarter). As a new activity, the IRS hobby-loss rule safe harbor has not started building yet.
Net earnings at this level result in an estimated in self-employment tax ( per quarter). With 1–2 profitable years on record, the IRS hobby-loss rule looks for at least 3 out of 5 profitable years to support expense deductions.
Net earnings of result in an estimated in self-employment tax ( per quarter). With profitable years, expense deductions are well-supported under the IRS hobby-loss rule safe harbor.
Net earnings of result in an estimated in self-employment tax ( per quarter). With , the IRS hobby-loss rule could apply — it looks for at least 3 of 5 profitable years to treat an activity as a business for tax purposes.
With profitable years, this activity meets the IRS hobby-loss rule safe harbor. Estimated self-employment tax at this level is ( per quarter). Some filers in this range explore LLC or S-Corp structures — those options typically become relevant around in net earnings.
With profitable years and in net earnings, this activity meets the IRS hobby-loss rule safe harbor. Estimated self-employment tax is ( per quarter). At this income level, filers often benefit from entity structures like an LLC with S-Corp election, which can split earnings between salary and distributions.
⚠️ At or more in gross payments, payers are required to issue a 1099-NEC. This income is reported to the IRS.
Est. Tax
HobbyStepPro is an educational tool — not professional tax advice. Estimates use 2026 IRS
thresholds current as of February 2026. Results do not account for state taxes, credits, or
complex tax situations. Consult a licensed CPA before filing.
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Calculations happen 100% on your device. We never see, store, or transmit your income data. It stays in your browser.
2026 Verified
Updated for finalized 2026 IRS inflation adjustments and the $20k / 200 transaction 1099-K rule.
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How the IRS Sees Your Hobby in 2026
The tax code puts every activity into one of three buckets. Knowing yours is half the battle.
Hobby income is any money earned from an activity you pursue primarily for personal enjoyment — selling handmade goods, doing gig work, pet sitting, or reselling items — where profit isn't your main motivation. The IRS distinguishes hobby income from business income based on profit intent and history. HobbyStepPro uses your gross revenue, expenses, and profit history to show which category you fall into and what it means for your taxes. Read: What Is Hobby Income →
It depends on your result. If the calculator places you in the Safe Hobby zone (net income under $400), self-employment tax does not apply. Once your net profit crosses $400, SE tax at 15.3% applies — and the calculator shows the estimated amount. If your activity is classified as a business, SE tax still applies but you gain full expense deduction rights.
Hobby income is taxed as ordinary income at your marginal federal rate, plus self-employment tax if net profit exceeds $400. The calculator estimates both components. It does not account for state income tax, credits, or deductions beyond hobby expenses — for those, the result panel recommends a CPA review.
In 2026, the 1099-K threshold has reverted to $20,000 in gross payments AND 200 transactions. This applies to payments from Etsy Payments, PayPal, Venmo, Stripe, and other third-party settlement organizations.
The 1099-NEC threshold is $600 in 2026. Platforms and businesses must issue a 1099-NEC to anyone paid $600 or more for services. The calculator flags this threshold based on the gross income you enter.
Yes — all hobby income is taxable, even without a 1099. The calculator treats all entered gross revenue as taxable and applies the appropriate thresholds to estimate what you owe.
Hobby expenses can offset your hobby income — reducing the taxable amount — but they cannot create a deductible loss. If you earned $1,000 and spent $600 on supplies, you have $400 of taxable hobby income. Enter your expenses in the calculator and it applies this reduction automatically. This is different from a business, where losses can offset other income.
For the calculator, hobby income is your total gross revenue before any expenses — what platforms like Etsy, PayPal, or Venmo deposited or reported to you. Include all sources: sales, tips, commissions, and any 1099-K or 1099-NEC amounts. Enter costs separately in the expenses field.
The Profit History input reflects the IRS 3-of-5-years safe harbor test. If your activity has been profitable in at least 3 of the last 5 years, the IRS presumes it is a legitimate business — which changes your tax treatment. Selecting your history lets the calculator assign an audit risk level alongside your tax estimate.
HobbyStepPro is a free hobby income tax calculator built for people who earned money from a hobby and aren't
sure what they owe. Whether the income came from selling handmade goods, freelance work, reselling, content
creation, hosting, pet sitting, or any other activity — if a platform or client paid you, this calculator
shows what the IRS expects and how hobby vs. business classification changes the math.