Side Hustle Earnings Keep Climbing as Participation Quietly Drops

Americans who run side hustles are now bringing home more money than they were a year ago, yet the share of adults who start one at all is shrinking. 27 percent of American adults reported having a side job in 2025, down from 36 percent in 2024 and the lowest level since 2017, according to Bankrate’s 2025 side hustle survey. Average monthly pay, however, kept climbing. LendingTree’s 2026 update found side hustlers earning $1,242 a month, up from $1,215 the year before and a sharp jump from $473 in 2022.

The gap between those two trends is the story. Fewer people are starting side gigs, but those who stick with them are making more. That split, with participation falling and average earnings rising, is reshaping how economists, the IRS, and the platforms themselves see a corner of the labor market that has gone from a quirky extra to a structural income category. The same surveys that document the boom in 2022 and 2023 now document its slow stratification.

The Participation Paradox

Two big surveys describe the same pull in two directions. Bankrate, whose 2025 fieldwork ran from June 2 through June 4, put participation at 27 percent, a nine-point drop year over year. LendingTree, surveying about 2,050 U.S. consumers this spring, reported that a third of Americans, 33 percent, hold a side hustle, down from 38 percent in 2025 and 44 percent in 2022.

Bankrate senior industry analyst Ted Rossman tied the decline to a stronger job market and a cooling inflation rate, with wage growth finally outpacing prices for a few years running. LendingTree’s side hustle income survey shows the flip side: among people who kept their gigs, average monthly income climbed to $1,242, and the share who say life would be unaffordable without their side income stayed at 61 percent.

LendingTree chief consumer finance analyst Matt Schulz framed the divergence as a K-shape. Many Americans are still struggling and need the extra cash, while many others are doing well enough to skip the second job. That leaves a smaller pool of side hustlers, paid more on average, carrying a heavier share of the country’s quiet reliance on gig work.

Where the Side Income Lands

Online sales and freelance work still lead the field. Bankrate found 15 percent of side hustlers in online sales and 14 percent in professional services such as consulting, freelance writing, and tutoring. Food delivery and crafts tied at 9 percent, with pet care at 7 percent and teaching and tutoring at 6 percent. LendingTree’s broader categories put gig and on-demand work first at 29 percent, freelance and professional services at 26 percent, and creative, content and media activities at 23 percent.

The earnings split by generation is uneven. Bankrate’s 2025 numbers put 34 percent of Gen Z in the side hustle pool, ahead of 31 percent of millennials, 23 percent of Gen X, and 22 percent of baby boomers. Average monthly income tracked the other way: millennials topped the table at $1,029, then Gen Z at $968, baby boomers at $918, and Gen X at $512.

LendingTree’s 2026 figures, tracking just millennials and Gen Z across years, show a steeper decline. Millennials ages 30 to 45 with a side hustle fell to 45 percent in 2026, from 50 percent in 2025 and 55 percent in 2022. Gen Zers ages 18 to 29 dropped to 43 percent in 2026, from 57 percent in 2025 and 62 percent in 2022. Across both surveys, the most cited reason for starting a side hustle in 2026 was covering cost-of-living expenses, at 32 percent, with discretionary spending or saving also at 32 percent and primary bills at 25 percent.

Why Gen Z Won’t Quit

The youngest working generation treats side hustles less as a fallback and more as a hedge. Bankrate’s 2025 survey found that 21 percent of Gen Z side hustlers want their side gig to become their main source of income, compared with 17 percent of millennials, 12 percent of Gen X, and 11 percent of baby boomers.

Monster.com’s Multi-Generational Survey, conducted with research firm TNS across more than 2,000 working and non-working people, captured the same mindset. 58 percent of Gen Z respondents said they would be willing to work nights and weekends for more pay, against 45 percent of millennials and 40 percent of Gen X and baby boomers. Some 42 percent of Gen Z said they plan to own their own company.

I’ve built something that can’t be automated away, and I control my own income by deciding how much work to take on.

Those are the words of Martin de Anda, a former financial underwriter who now runs a flyer-distribution business full time after starting it on the side. Bankrate’s profile of de Anda also captures the recession scar behind the Gen Z push: 34 percent of Gen Z workers reported having no emergency savings, which makes the extra gig look less like ambition and more like insurance. Two in five Gen Z side hustlers told LendingTree they expect to always have one.

The IRS’s Two-Box Verdict

Every paid hobby eventually meets a tax form. The IRS sorts side income into two boxes, and the difference shapes what gets reported where. Income from a hobby, defined by the agency as an activity done for pleasure or recreation rather than profit, still has to be reported on Schedule 1 of Form 1040, line 8j. Income from a business, defined as an activity run with the intent of making a profit, goes on Schedule C and can trigger the 15.3 percent self-employment tax once net earnings hit $400 or more.

Either way, payment apps and marketplaces may issue Form 1099-K for transactions processed through them. The IRS hobby-versus-business guidance lists the questions that decide which box a side earner falls into, including whether the activity is run in a businesslike manner, whether the person depends on the income for their livelihood, and whether past years turned a profit.

The threshold for receiving a 1099-K has been a moving target. After the One Big Beautiful Bill Act, the 2026 reporting threshold for third-party settlement organizations reverted to $20,000 in gross payments and more than 200 transactions in a year, per the IRS publication 1099 for 2026. Hobby income below the threshold still has to be reported; the form is a heads-up from a platform, not a permission slip from the agency. As more paid hobbies cross payment apps, that two-box verdict will land on more kitchen tables this April.

The Half-Trillion Backdrop

Side hustles do not sit in isolation. They ride a creator economy that Goldman Sachs Research forecasts could approach $480 billion by 2027, up from roughly $250 billion today. The same report counts about 50 million global creators and projects compound annual growth of 10 to 20 percent over the next five years.

For all that scale, the rewards are concentrated. Industry trackers summarizing the Goldman Sachs work note that only 4 percent to 10 percent of creators earn more than $100,000 a year, a long tail of small sellers underneath a thin peak of full-time earners. That mirrors what Bankrate sees in the side hustle data, where 28 percent of side hustlers earn between $1 and $50 a month.

The platform plumbing keeps getting easier. Etsy, a marketplace built almost entirely on paid hobbies, posted $12.72 billion in gross merchandise sales in its most recent annual report, with roughly 454 million visitors a year, per Printful’s compilation of marketplace data. Lower friction draws in more sellers, which keeps the entry-level tier crowded and the average monthly take modest.

The Costs Side Earners Often Miss

Income is only half the picture. Supplies, platform fees, ads, shipping, chargebacks, and the time it takes to keep customers happy all cut into margins. Tax set-asides matter even more once the IRS classifies the work as a business. Side earners who skip recordkeeping often meet the result in April, when quarterly estimates or full Schedule C filings come due.

LendingTree’s Schulz warns that the volatility of side income makes budgeting harder, since monthly receipts can swing sharply. The Due.com analysis of paid hobbies flags three pressure points worth watching: regulation around gig work and platform fees, algorithm and search changes that can help or hurt small sellers, and a wave of short courses and creator-friendly financing that could either lift or commodify the same niches. Goldman Sachs Research expects more creators to gravitate toward larger incumbent platforms that offer stability, scale, and multiple monetization tools, a “flight to quality” that may pull the average side hustle onto fewer, bigger rails. Nearly a third of side hustlers told LendingTree they expect to always have one, a sign that the second job has settled into the household budget rather than waiting on the other side of the next downturn.

Frequently Asked Questions

How much does the average side hustler earn per month?

LendingTree’s 2026 survey put the average at $1,242 a month, up from $1,215 in 2025 and $473 in 2022. Bankrate’s 2025 survey reported an average of $885 a month, compared with $891 in 2024. The two averages differ because of methodology and timing, and the gap itself is part of the story.

Which generation has the most side hustles?

Gen Z leads in Bankrate’s 2025 survey at 34 percent, followed by millennials at 31 percent, Gen X at 23 percent, and baby boomers at 22 percent. LendingTree’s 2026 data shows millennials just ahead of Gen Z in average monthly income, at $1,029 to $968.

Do I need to report hobby income to the IRS?

Yes. The IRS treats hobby income as taxable and asks filers to report it on Schedule 1 of Form 1040, line 8j. Whether the activity counts as a hobby or a business, with the business route running through Schedule C, depends on factors such as profit motive, time invested, and reliance on the income.

What is the 1099-K threshold for 2026?

After the One Big Beautiful Bill Act, the IRS reverted the Form 1099-K reporting threshold for third-party settlement organizations to $20,000 in gross payments and more than 200 transactions per year. Receiving a 1099-K does not change what is owed; income below the threshold still has to be reported on a return.

Is the side hustle economy still growing?

Participation is down, but earnings are up. Goldman Sachs Research forecasts the wider creator economy could approach $480 billion by 2027, and 55 percent of Americans told LendingTree they are likely to start a side hustle in the next year. The pool of side hustlers is smaller and more concentrated than it was at the 2022 peak.