Money & tax

How Side Hustle Income Is Taxed in Australia

Published 30 July 2026 · Every claim sourced — see references below

Side hustle income in Australia is taxed the same way as any other income: it’s added to your salary and other earnings, and the total is taxed at your marginal rate. There’s no separate “side hustle tax” — but because the extra income sits on top of what you already earn, every dollar of it is effectively taxed at your highest bracket, and nothing is withheld along the way unless you arrange it. This guide explains the mechanics, using the ATO’s own rules and rates.

Key points

All side hustle income is assessable and must be declared, whatever the amount — the ATO's Sharing Economy Reporting Regime means platforms already report your earnings to it.
Side hustle profit is taxed at your marginal rate (16% to 45% for 2025–26, plus the 2% Medicare levy) on top of your other income.
The $18,200 tax-free threshold applies once, across all your income — claim it from one payer only.
You can deduct expenses directly related to earning the income, and you must keep records for five years.
GST registration kicks in at $75,000 turnover — except ride-sourcing, where it applies from the first dollar.

The rates that apply in 2025–26

Your side hustle profit (income minus deductible expenses) is added to your taxable income and the total is taxed under the standard resident rates, per the ATO’s current rate tables:

Taxable income	Tax on this income
0 – $18,200	Nil
$18,201 – $45,000	16c for each $1 over $18,200
$45,001 – $135,000	$4,288 plus 30c for each $1 over $45,000
$135,001 – $190,000	$31,288 plus 37c for each $1 over $135,000
$190,001 and over	$51,638 plus 45c for each $1 over $190,000

These rates don’t include the 2% Medicare levy, which most residents also pay.

The practical effect: if you earn an $85,000 salary and make $10,000 profit from a side hustle, that $10,000 sits in the 30% bracket, so you’d owe roughly $3,200 extra tax on it (30% plus the 2% Medicare levy). Nobody withholds that during the year — it arrives as a bill when you lodge, which is why the single most useful habit is setting aside a percentage of every side hustle payment as you receive it. Our second job vs ABN calculator lets you estimate your own numbers.

The tax-free threshold trap

The $18,200 tax-free threshold applies to your total annual income from all sources — not per job, and not per income stream. If you have two employers, the ATO’s guidance is to claim the threshold from the payer who pays you the most and have the other withhold at the no-threshold rate. Claiming it twice is the classic second-job mistake: both employers under-withhold and the difference lands as a debt at tax time.

If your side hustle is contracting or platform work rather than employment, there’s no withholding at all — the threshold question doesn’t arise, but the set-money-aside rule matters even more.

Employee-style vs ABN-style income

How your side hustle income is taxed doesn’t change, but how the tax gets collected does.

	Second job (employee)	ABN / contractor / platform
Tax withheld for you	Yes (PAYG withholding)	No — you keep the gross amount
Superannuation	Employer pays it	Generally your responsibility
How tax is collected	Through payroll	At lodgment, then PAYG instalments
Reported to the ATO	Single Touch Payroll	Platforms report under the SERR

If you’re carrying on an enterprise — regularly selling, invoicing, advertising your services — you’ll generally need an ABN; our guide to whether you need an ABN for a side hustle covers the tests in detail.

Hobby or business?

Genuine hobby proceeds aren’t assessable income — but the bar for “hobby” is lower than people hope. The ATO’s Are you in business? guidance looks at whether your activity is repeated, organised and carried out with the intention of making a profit. No single factor decides it, but if you’re regularly taking orders, advertising and pricing to profit, you’re likely in business and the income is taxable from dollar one. business.gov.au’s hobby-vs-business explainer is a useful second reference. We’ll cover the distinction in depth in a dedicated guide.

The ATO already knows about your platform income

Since 1 July 2023 (ride-sourcing and short-stay accommodation) and 1 July 2024 (asset hire and all other reportable transactions), electronic platforms have been required to report sellers’ identity and payment details directly to the ATO under the Sharing Economy Reporting Regime. That includes Uber, Airbnb, Airtasker and similar platforms. The ATO data-matches these reports against tax returns, so “they’ll never know about my delivery earnings” is no longer a gamble — it’s a guaranteed loss. If you’re in gig delivery work, our FWC minimum pay explainer covers the pay-floor side of the same jobs.

Deductions, GST and PAYG instalments

You can deduct expenses that directly relate to earning your side hustle income — materials, platform fees, work-related travel, a proportion of phone and internet — apportioned for any private use. Keep records (invoices, receipts, bank statements, logbooks) for five years; the ATO’s record-keeping rules set out what counts.

GST is separate from income tax. You must register for GST within 21 days once your GST turnover reaches $75,000, or earlier if you expect it to. The major exception is ride-sourcing: drivers carrying passengers for a fare must register from their first dollar, regardless of turnover. That first-dollar rule doesn’t extend to food delivery, which follows the ordinary $75,000 threshold.

After your first tax return that includes decent side hustle profit, don’t be surprised if the ATO moves you onto PAYG instalments — quarterly prepayments of the coming year’s tax. Individuals are generally entered automatically once instalment income reaches $4,000 and the last assessment showed tax payable of $1,000 or more (among other criteria). It’s not an extra tax, just the same tax collected earlier, and it spares you the annual bill shock.

What to do in practice

Declare everything, claim the threshold once, set aside roughly your marginal rate (plus 2%) from every side hustle payment, keep receipts as you go, and watch the $75,000 GST line if things take off. For the year-by-year specifics — offsets, lodgment dates and this year’s quirks — see our side hustle tax time 2026 guide, and if you receive Centrelink payments, the reporting rules apply on top of everything here.

Frequently asked questions

Is there a special tax rate for side hustle income?

No. Side hustle income is added to your other taxable income and taxed at your ordinary marginal rate. It can feel heavily taxed because it stacks on top of your salary, so every side hustle dollar is taxed at your highest bracket.

Do I have to declare side hustle income under $18,200?

You must declare all assessable income in your tax return regardless of the amount. The $18,200 tax-free threshold applies to your total income from all sources combined — not to each income stream separately.

Will the ATO know about my platform income?

Very likely. Under the Sharing Economy Reporting Regime, platforms such as Uber, Airbnb and Airtasker must report sellers' identity and payment details to the ATO, which data-matches them against tax returns.

When do I need to register for GST?

When your GST turnover reaches $75,000 (or you expect it to), you must register within 21 days. Ride-sourcing drivers are the big exception — they must register from their first dollar of fares.

What records do I need to keep?

Records that substantiate your income and expenses — invoices, receipts, bank statements, logbooks — generally for five years. Records for capital assets need to be kept for the whole time you own them plus five years.

Sources

This article is general information only, not tax, legal or financial advice. It doesn't consider your personal circumstances. For advice on your situation, speak to a registered tax agent or licensed adviser, and always check current requirements with the official source linked above.