Side Hustle Taxes in Connecticut: A W-2 Job Plus 1099 Income (2026)

What you owe on side income

If you do side work as an independent contractor, you're self-employed for that income, even if it's small. Your profit (what you earn minus business expenses) faces three taxes:

• Self-employment tax: 15.3% on 92.35% of your profit, for Social Security and Medicare. If 92.35% of your profit is under $400, there's none. If your W-2 wages are already near the $184,500 Social Security limit for 2026, the 12.4% Social Security part only applies to the room left under that limit.
• Federal income tax: side profit is stacked on top of your wages, so it's taxed at your highest bracket.
• Connecticut income tax: 2% to 6.99%. Extra income can also shrink Connecticut's personal exemption and credit, so the state bite on side income can be higher than you'd guess.

You report the business on Schedule C and the self-employment tax on Schedule SE, along with your regular return. You owe tax on all of it, whether or not a client sends you a 1099.

A worked example

Say you're single, earn $60,000 at a W-2 job, and make $15,000 of profit from freelance work in 2026. Using the standard deduction and 2026 rates, the side income adds roughly:

Your numbers will differ with your bracket, filing status and expenses. Our CT self-employment tax calculator lets you enter both your wages and side profit.

Two ways to pay: withholding or estimates

The IRS and Connecticut both want tax paid during the year, not all in April. With a day job, you have a choice.

Option 1: raise your paycheck withholding

On your federal Form W-4, enter an extra amount per paycheck in Step 4(c). On Form CT-W4, enter an extra amount on Line 2. In the example above, with 26 paychecks a year, that's about $151 extra federal and $42 extra Connecticut per paycheck. A real advantage: the IRS treats withholding as paid evenly through the year, even if you raise it in the fall. See our CT-W4 guide for the Connecticut form.

Option 2: make quarterly estimated payments

You can also pay the IRS and Connecticut directly. For 2026, payments are due April 15, June 15 and September 15, 2026, and January 15, 2027. Both generally expect estimates if you'll owe $1,000 or more after withholding. Estimates suit side income that's uneven or hard to predict. Use the quarterly tax calculator and read CT estimated tax payments for how to pay.

Many people do a bit of both: extra withholding for the steady part, and an estimated payment after a big project.

Deductions that shrink the bill

Every legitimate business expense lowers both self-employment tax and income tax. Common ones for side businesses:

• Business miles at the IRS standard rate: 72.5 cents a mile from January through June 2026 and 76 cents from July 1. Commuting to your day job doesn't count. Try the mileage calculator.
• A home office used regularly and only for the side business. See the home office calculator.
• Software, supplies, equipment, a share of your phone, platform and payment fees, and business insurance.

Keep receipts and a simple log from day one. A separate bank account for side income makes this much easier.

Connecticut details

• Sales tax. If you sell goods or taxable services, you need a Connecticut sales and use tax permit ($100) before you make sales.
• CT Paid Leave. It's withheld from your W-2 pay, but self-employed income isn't required to pay in. You can opt in.
• Forming an LLC is optional for a side business. It costs $120 to form and $80 a year for the annual report. See the CT LLC cost calculator.

Thinking about turning the side work into your main income? Compare the offers with our 1099 vs. W-2 take-home calculator, and set your rate with the hourly rate calculator.