Side Income

Personal Finance

Side income is any earnings beyond your primary W-2 paycheck — interest, dividends, rental income, freelance fees, royalties, capital gains. The IRS taxes most side income at your marginal rate, but the categorization matters: long-term capital gains and qualified dividends get preferential rates (0%, 15%, or 20% depending on bracket); rental income may be partially offset by depreciation; self-employment income carries an extra 15.3% SE tax. Building multiple income streams is the single most reliable path to financial independence — wealth is built less by frugality alone than by having more income than your spending consumes.