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If you’ve been skipping your federal student loan bills, or you have defaulted loans, your time is running out to get back on track without harsh consequences. Two key pandemic-era relief programs are set to expire on Sept. 30: the student loan on-ramp and the Fresh Start program.

Millions of borrowers are benefitting from the on-ramp or Fresh Start — and some may not know it. To check, log into your studentaid.gov account and review your monthly payment history and loan repayment statuses. If you have missed or late payments, you’re on the on-ramp. If you have a loan listed as in default, you’re benefiting from the Fresh Start program.

In either case, you need to act by Sept. 30. Here’s how.

Student loan on-ramp: Make a plan to deal with your bills

The student loan on-ramp began Oct. 1, 2023, and lasts until Sept. 30, 2024. It’s intended as a safety net for the “most vulnerable borrowers,” the White House said last summer.

The program is automatic for all borrowers who miss payments during this time — there is no enrollment process. During the on-ramp, you can’t fall into delinquency or default. Missed payments won’t be reported to credit bureaus.

Roughly 3 million borrowers have taken advantage of the on-ramp and were at least 30 days late on their loans as of June 30, according to Federal Student Aid office data.

If you’ve been skipping payments, make a plan for October. Otherwise, you could face harsh and costly consequences. Once a payment is 270 days late, you will enter student loan default. Debt collectors can garnish your wages and charge hefty fees.

Here are steps to take before the on-ramp expires:

  • Check your student loan accounts. Log into studentaid.gov, see how much you owe and update your contact and billing info. Your servicer can answer questions. 

  • Choose a repayment plan. If you don’t select a repayment plan, you’re automatically enrolled in the standard 10-year repayment plan. For more affordable payments, consider an income-driven repayment (IDR) plan.

  • Consider a deferment or forbearance. If you won’t be able to afford payments for the foreseeable future, consider a student loan deferment or forbearance to pause payments for up to three years. 

If you want to change repayment plans, note that only two IDR plans are currently available: SAVE and Income-Based Repayment (IBR).

Fresh Start program: Sign up ASAP to lock in defaulted loan relief

If your federal student loans were in default before the pandemic, take advantage of the Fresh Start program. About 7.5 million borrowers with defaulted loans are eligible.

You must enroll in the program by Sept. 30 to get out of default and lock in benefits, including:

  • Loans returned to “current” status on credit reports, and negative default marks removed.

  • Access to federal student aid and other government loans, like mortgages.

  • Access to flexible repayment plans and potential loan forgiveness. 

  • Access to short-term relief, like deferment or forbearance.

  • Suspension of involuntary debt collection efforts.

If you miss the Sept. 30 deadline and let your loans stay in default, you could face harsh consequences. Debt collectors might garnish your paychecks and tax refunds. You may face steep collections fees. Your credit score could plummet, making it difficult to qualify for future loans, mortgages or even apartment rentals.

You can avoid that headache — and get back on track with an affordable repayment plan — by signing up for the Fresh Start program. Here’s how:

  • Submit a Fresh Start request. Fresh Start enrollment is free and can take less than 10 minutes. You can do it online on myeddebt.ed.gov, over the phone by calling 1-800-621-3115 or by sending a letter postmarked by Sept. 30. 

  • Watch for servicer communication. After you sign up for Fresh Start, the government will transfer your payments from the Default Resolution Group to a federal student loan servicer. Your new servicer will contact you once your loans transfer over.

  • Choose a repayment plan after getting out of default. You’ll be automatically placed into the standard 10-year repayment plan, but about 80% of Fresh Start borrowers sign up for an IDR plan, according to the Education Department. Half of Fresh Start borrowers have $0 monthly payments under an IDR plan. 

You can apply for an IDR plan within a week or so of your loan transfer.

Source: nerdwallet.com

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About 43 million Americans hold federal student loan debt and, for some, paying off that debt can be a burden. Many borrowers have access to programs that can pause or reduce their payments, but a new survey finds some borrowers may be forgoing the proper channels and stopping repayment entirely in hopes of student loan forgiveness.

Nearly one in three (31%) student loan borrowers have slowed the repayment of their loan(s) because they hope to see their loans reduced or forgiven by the federal government, according to a recent NerdWallet survey conducted online by The Harris Poll among more than 600 U.S. adults who currently have student loans. And nearly one in four (23%) have stopped their student loan payments altogether for the same reason.

Notably, the survey didn’t ask whether borrowers who slowed or stopped their repayments did so after entering into forbearance or deferment plans. Further, student loan delinquencies have remained largely unchanged since the COVID-19 payment pause ended last October, according to data from the New York Fed. This is likely due to a one-year “on-ramp” grace period set to expire Sept. 30, during which the Department of Education is not reporting any borrowers who miss payments as delinquent.

A worry for borrowers, and a top election issue

Despite the Supreme Court blocking the Biden Administration’s broad plan to cut up to $20,000 in student loan debt per eligible borrower last June, the White House has forgiven roughly $168.5 billion over the last four years, largely through existing forgiveness programs like Public Service Loan Forgiveness and income-driven repayment plans. The president’s current “plan B” student loan forgiveness plan would reduce or eliminate loan debt for a more targeted group of individuals.

There’s no guarantee this plan or anything resembling it will go into effect. Just as legal challenges derailed the administration’s first, broader push for debt relief, lawsuits could force the administration or its successor to further scale back this set of proposals. This fall’s elections could also determine how debt relief proceeds — if at all.

Borrowers seem to have taken note.

A quarter (25%) say they are concerned recent student loan forgiveness efforts will be reversed by the courts. And more than one in five (22%) say that student loan forgiveness is one of the most important issues when choosing a presidential candidate.

Not paying student loans can hurt you

There are consequences if you fail to keep up with your student loan payments.

If you have federal student loans, loans become delinquent as soon as you miss a payment. Loan servicers can begin charging late fees 30 days after that. After three months, servicers may begin reporting the debt to credit reporting agencies, dragging down your credit score. Eventually, student loans enter default and your loan holder will be able to garnish your wages and withhold tax refunds and Social Security payments from you.

The default process happens even faster for student loans held by private lenders.

Pick the repayment plan that’s right for you

While the repercussions of not paying student loans can be serious, the good news is you have several repayment options for federal student loans. (Private student loan repayment options vary by lender.) Use the Education Department’s loan simulator to estimate your monthly bills and overall repayment journey under different repayment plans.

Standard repayment: Under this plan, you’ll pay the same amount each month for a decade. This is generally the fastest way to pay loans off, and therefore you may pay less total interest. You’re placed into this plan by default when repayment begins.

Income-driven repayment: If payments under standard repayment seem too high, you can apply for income-driven repayment (IDR). Under IDR plans, you’ll pay a portion (usually 10-20%) of your discretionary income each month for a set period of time (usually 20-25 years), after which your remaining debt will be forgiven.

Graduated payment: Consider the graduated payment plan if an IDR plan isn’t a good fit, but you want to lower your monthly bill right now. Under this 10-year plan, your payment will start low and increase every two years. The advantage is you’ll be able to free up money in the short term for other needs. The downside is you may end up paying more in interest than under the standard repayment plan.

Extended repayment: If you owe more than $30,000 in loans, you can apply for the extended repayment plan. This plan gives you up to 25 years to repay your loans and you can choose to pay the same amount each month or a gradually increasing amount as under the graduated plan.

Borrowers seem to be taking advantage of these options, as a third (33%) say they’ve changed their student loan repayment plan in order to make their payments more manageable, according to the recent survey.

Before defaulting on your loans, consider deferment, forbearance or an IDR plan

If you simply can’t afford to make any student loan payments right now, you still have options: namely, deferment and forbearance. More than a quarter (27%) of student loan borrowers have used one or both of these programs to pause their federal loan payments, according to the survey.

Both pause your payments and protect your credit from taking the hit it otherwise would if you simply stopped making payments. But the similarities end there.

First, look into deferment. Under deferment, interest does not accrue on your subsidized federal student or Perkins loans while payments are paused (interest will continue to accrue on unsubsidized federal or private student loans).

You must meet a qualifying life event in order to qualify for deferment. Qualifying events include attending school at least half time, being active duty military or in the Peace Corps, experiencing unemployment or earning less than 150% of your state’s poverty guidelines, receiving some forms of public assistance or undergoing cancer treatment.

If you don’t qualify for deferment, consider forbearance. Under forbearance, interest will continue to accrue on your loans (whether federal student loans or private loans) while repayment is paused, and you’ll be limited to a 12-month break from payments.

An income-driven repayment plan can also help you manage payments. If you’ve lost your income, or you earn under a certain threshold, you may qualify for $0 payments under an IDR plan — and you’ll still make progress towards IDR forgiveness while making these $0 payments. Even if you don’t qualify for $0 payments, IDR plans can lower your bills to a more manageable level.

METHODOLOGY

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from July 16-18, 2024 among 2,076 U.S. adults ages 18 and older, among whom 625 have student loans. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected].

Disclaimer

NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.

Source: nerdwallet.com

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I started making extra money and side hustling around 15 years ago, and since then I have done over 20 different side hustles. I started so that I could stop living paycheck to paycheck, and so that I could pay off my student loans quickly (I ended up paying off $40,000 in student loans in…

I started making extra money and side hustling around 15 years ago, and since then I have done over 20 different side hustles.

I started so that I could stop living paycheck to paycheck, and so that I could pay off my student loans quickly (I ended up paying off $40,000 in student loans in just 7 months thanks to side hustling!).

Some were short-lived, while others turned into steady streams of income (and are even my full-time income today). Each side job taught me something valuable about money, time, and effort. I juggled everything from reselling clothes online to being a virtual assistant, mystery shopping, answering online surveys, having roommates, and more.

There isn’t one best way to make extra money; it depends on what you’re good at, what you like, how much time you have, and more.

If you want to start a side job, my experiences can help you decide. I’ll tell you what I learned from each one I tried, so you can see the pros and cons of each.

My Side Hustles Review

Below is my review of the different side hustles I have tried over the years. These are in no particular order.

A picture of me blogging from several years ago 🙂

1. Blogging

Blogging can be a great way to earn money while writing about topics you love. I’ve done it for years and have seen how it can grow from a hobby into a full-time job.

I enjoy blogging for many reasons such as:

  • It’s flexible – You can blog from anywhere, anytime.
  • It’s affordable to start – You just need a computer and internet.
  • It’s a great creative outlet – Share your thoughts and passions with the world. I enjoy blogging and running a website.

While there are a lot of great reasons to start a blog, there are some challenges such as it can be time-consuming and there is no guarantee that you will make money.

When I first started my blog, I was working over 40 hours a week on it and making nothing. It took me 6 months to make my first $100 from it, actually!

But, it was all worth it in the end.

Blogging used to be my side hustle and it is now my full-time job where I have earned over $5,000,000 over the years.

I would definitely say that blogging is my favorite side hustle.

For me, it was a great second job because I could work on my blog before my day job, during lunch, after work, and on weekends. You can make your own schedule, which is a big bonus!

You can learn more about how to begin in my free How To Start a Blog Course here.

2. Paid online surveys

Paid online surveys are a way to make some extra cash when you have spare time. With just a few clicks and some honest answers, you can see money rolling in.

Companies want to know what customers think about their products and services and that is why they pay for surveys. By sharing your opinions, you help them improve and develop better offerings. In turn, they pay you for your time and insights.

You usually can earn anywhere from $0.50 to $5 per survey, depending on the length and how hard the survey is. And, surveys can take anywhere from around 10 minutes to an hour, so they are not high paying.

I’ve taken a lot of surveys over the years, and what I like about them is that you can do them whenever you want – in the morning, during lunch, before bed – whenever it works for you. There’s no strict schedule, and they are really easy to do.

My tips for success:

  1. Sign up for multiple sites: This increases your chances of getting more surveys and making more money.
  2. Complete your profile: Some survey sites match you to surveys based on your profile.
  3. Be honest: Giving truthful answers ensures you stay eligible for more surveys.

Payment methods are typically cash via PayPal, bank transfer, or free gift cards (such as to Amazon, Walmart, Starbucks, and more).

You won’t get rich from these surveys, but it’s a nice way to earn some side cash. I know that some people think that surveys are a waste of time – but I know several people (including myself) who liked doing them because they are so flexible. I think the right mindset to have is that they will definitely not make you rich, and some can take a long(er) time to earn $5.

The survey companies I recommend signing up for include:

  1. American Consumer Opinion
  2. Survey Junkie
  3. Swagbucks
  4. InboxDollars
  5. Branded Surveys
  6. Prime Opinion
  7. Five Surveys
  8. PrizeRebel
  9. Pinecone Research

3. Focus groups and paid research studies

You can make money by participating in focus groups. Companies pay for your opinions to improve their products and services.

This is similar to paid online surveys, but paid research studies and focus groups typically pay more.

User Interviews is a popular site where you can find paid research studies and focus groups.

Big companies like Pinterest, Spotify, Macy’s, Home Depot, Trip Advisor, and Amazon use User Interviews to get feedback on their new products, apps, and websites.

You can make $50 to $100 per hour, or even more, just by sharing your thoughts and feedback.

I did a user interview myself and got paid $400 for just one hour of work. It was easy, and everything was done online through a video call where they asked for my opinion on a new feature for a website.

Please click here to learn more about User Interviews.

Also, if you’re interested in paid medical research studies, then that can be a high-paying option as well. When my husband was younger, he took part in a few medical research studies to help us make extra money. He usually got paid about $1,000 for a week’s worth of time.

4. Dividends

Okay, so this isn’t exactly a side hustle, but it is a way that you can make more money so I wanted to include it here, especially since it’s one of my favorite ways to increase my income.

Dividends are an awesome way to earn passive income. You don’t need to do much work, and the money comes in. Many companies pay dividends to their shareholders regularly.

Here are a few benefits of investing in dividend stocks:

  • Regular income: You can receive payments quarterly or even monthly.
  • Low effort: Once you buy the stock, you don’t have to do much else.

A dividend is a portion of a company’s profits given to its eligible shareholders. You can receive dividends in cash, stock, or even options to buy more stock.

If you own shares in a company that pays dividends, you’ll get a dividend for each share you own.

For example, if you have 10 shares in Company XYZ and they pay $5 in cash dividends each year, you’ll get $50 in dividends for the year. Dividends are usually paid out quarterly, which means 4 times a year. So, in the example, the $5 in yearly dividends would likely be paid as $1.25 per quarter for each share you own.

You can learn more at What Are Dividends & How Do They Work? A Beginner’s Guide.

5. Buy and sell flipping

Flipping items is a great side hustle, and this is when you buy items at a low price and sell them for more.

The benefits of buy and sell flipping include:

  • Flexibility: You can flip items in your free time.
  • Profitable: Potential to earn anywhere from $50 to $5000 a month.
  • Fun: The thrill of finding good deals and making a profit.

I have flipped many items for resale over the years, and I even had a small reselling business at one point. It’s a fun way to make extra money.

While flipping items by buying and selling them for profit can be exciting, it has some downsides. One big risk is that you might not always make a profit, especially if the market drops or you overestimate the item’s value. It can also take a lot of time to research products, find good deals, and manage your listings. There’s tough competition too, as many people are trying to flip items, which can lower prices.

You can learn more at How I Made $40,000 In One Year Flipping Items.

6. Sold clothing

Selling used clothing can be a great way to make extra money. You can find clothes to sell in many places: thrift stores, clearance aisles, garage sales, and even your own closet.

For me, I liked to sell clothing on eBay as well as in person to places like Plato’s Closet. There are many more options these days, such as Poshmark and Facebook Marketplace.

Selling used clothes as a side hustle has its ups and downs. On the plus side, it has low start-up costs because you can start with clothes you already own, and it’s eco-friendly, supporting sustainable fashion. You also get to work on your own schedule, and there’s a high demand for secondhand clothes, especially trendy or vintage items. But it can take a lot of time to sort, clean, photograph, and list the clothes. Plus, shipping costs can cut into your profits, especially for heavier items.

I’ve sold a lot of clothing over the years, both online and in person (I also used to work at a secondhand clothing store for many years). I even had a small clothing resale business at one point, so I have plenty of experience in selling used clothes!

You can learn more at 16 Best Places To Sell Clothes For Cash.

7. Social media management

Social media management is a great side hustle if you enjoy creating content and engaging with people online.

Social media managers handle businesses’ social media accounts like Facebook, Instagram, and Twitter. They create posts, reply to comments, and help grow their followers.

Some benefits include:

  • Flexible hours: Many times, you can work anytime, making it easy to fit around your main job. This is because you can schedule social media posts to go out at the exact time that you want.
  • You can be creative: You can express your creativity through different types of content.
  • Work from anywhere: All you need is a laptop and internet.

But, there are some cons too. This wasn’t my favorite side hustle, mainly because it was stressful at times. It is very time-consuming (creating good content and engaging with followers can take a lot of time), there is constant learning (social media trends change quickly, so you need to keep learning new skills), and some clients may have high expectations and tight deadlines.

If you like being creative and spending time online, social media management can be a fun and rewarding side hustle.

8. Virtual assistant

Being a virtual assistant is one of my favorite side hustles. It’s flexible, and you can work from anywhere. You handle tasks for other people or businesses, like managing emails, scheduling appointments, or doing research.

Why I like virtual assisting:

  • Flexible hours: You set your own schedule.
  • Work from home: No need to commute.
  • Variety of tasks: You can decide what virtual assistant tasks you want to provide.

Working as a virtual assistant is a great way to make extra money. It gives you flexibility, a variety of tasks, and you can get started with just a computer and an internet connection.

You can learn more at Best Ways To Find Virtual Assistant Jobs.

9. Freelance writer

As a freelance writer, you get to write for different clients and websites. You can work from home and set your own hours. This side hustle can be very flexible, especially if you enjoy writing.

I’ve been a freelance writer for many years, and I really enjoy it. I’ve written for lots of different websites and companies, and I’ve made good money doing it.

The positives of being a freelance writer include:

  • Flexible schedule: You can write during your free time.
  • You get to decide what you want to write about: You get to write about different topics.
  • Work from home: No need for a commute.

There are some cons, though, such as income can vary, with some months being busy while others are slower. Finding clients requires actively searching to keep work steady. Plus, meeting deadlines can also be stressful, adding pressure to the job.

Freelance writing is a great side hustle if you love to write and want to make extra money. It takes time to build a steady income, but it can be very rewarding.

You can learn more at 14 Places To Find Freelance Writing Jobs – (Start With No Experience!).

10. Receipt scanning apps

Using receipt scanning apps is an easy way to earn some extra money. You just take a picture of your receipts from shopping, and these apps give you points or cash back. Here are some of the best apps to try:

I’ve been using receipt-scanning apps for years, and I love how easy they are to use. You can earn points or cash without spending much time. Plus, since I already have the receipts, it’s great to make some extra money by doing almost nothing.

My favorite receipt-scanning apps are:

I like to use both Fetch Rewards and Ibotta on all of my receipts (yes, at the same time to stack rewards).

Receipt-scanning apps can be handy, but they do have some downsides. One of the main drawbacks is that the rewards are usually small, so it can take a while to earn a significant amount. You also have to remember to scan receipts regularly, which can be time-consuming and easy to forget.

For me, though, I like to use them on all of my receipts as it only takes a quick moment to do.

11. Mystery shopping

When I had student loans to pay off, I turned to mystery shopping to make extra money. It didn’t make me rich, but it helped increase my income and allowed me to enjoy some free meals and free stuff (like free makeup and household goods).

Mystery shopping involves acting like a regular customer and then reporting on your experience. You might review a restaurant, shop at a store, or even evaluate a phone call. Companies use your feedback to improve their service.

What I like about mystery shopping:

  • Extra cash (typically $10 to $15 per mystery shopping task)
  • Free items or meals (you’re usually given an amount to spend in the store or restaurant)
  • Flexible schedule

Mystery shopping helped me make around $100 to $200 a month.

Joining a reliable mystery shopping company is important, though, as there are a lot of scams. I used Bestmark and had a good experience with them.

Mystery shopping won’t replace a full-time job, but it’s a fun way to make some extra money.

You can learn more at How To Become A Mystery Shopper.

12. Babysitter

Being a babysitter is a flexible side hustle. You can choose your own hours and accept jobs that fit your schedule.

Parents often need help on weekends or evenings, which can be perfect if you are busy during the day.

What I liked about babysitting:

  • Good pay – around $15 to $25 per hour (depending on where you live)
  • Helps develop responsibility
  • Flexible hours

Of course, there are downsides to being a babysitter, such as it can be tiring watching kids for long periods, and sometimes this side job means that you’ll be working late nights or weekends.

I was a babysitter when I was younger and I really liked it. The kids I babysat were fun to be around!

13. Coaching

Coaching can be a great side hustle. You get to help people grow and achieve their goals. It also offers flexibility because you get to be your own boss and decide your work hours.

I used to offer blog coaching in the past, and I enjoyed helping people learn how to grow their blogs and make money blogging.

It was also really easy for me to do, as I have been blogging for many years and have learned a lot about what to do and what not to do.

If you have the expertise and enjoy motivating others to improve, then there is probably a topic that you can coach others on.

14. Course creator

Creating an online course can be a game changer for your income. I launched my first course, Making Sense of Affiliate Marketing, in July 2016. Within the first year, it brought in around $434,698. This wasn’t due to any fancy marketing techniques but mainly through word-of-mouth.

Even though the course was successful, it didn’t come easy. I was nervous about it, especially since it was my first. I had worries that no one would be interested. Plus, many people said that your first course usually isn’t great.

Yet, the desire to help others understand affiliate marketing kept me going. By sharing my knowledge, I aimed to help bloggers increase their income. Online courses are beneficial because they can include interactive materials, workbooks, and community support, which go beyond what an ebook offers.

Here are some success stories from my course:

  • One student increased their monthly income from $272 to $4,400.
  • A new blogger got their first affiliate sale just two days after taking the course.
  • Another went from earning $87 a month to over $1,700 the next month.

And I have helped countless bloggers earn well over $100,000 a year from their blog and turn it into a full-time income.

Creating a course is a lot of work, but it can also be very rewarding. It allows you to reach a wider audience and can become a substantial income stream. If you have knowledge to share, you may want to try creating your own online course.

This is a business idea that I recommend more people start! I enjoy taking courses from people and sign up for them all the time. I love learning, and so do others.

You can learn more at How I’ve Made Over $1,000,000 From My First Course Without a Big Launch.

15. Affiliate marketing

Affiliate marketing is one of the most popular side hustles. It’s easy to start and doesn’t need a lot of money up front.

You promote products and earn a commission for every sale made through your referral link. This can be done on social media, a blog, a YouTube channel, and more.

What I like about affiliate marketing:

  • Low start-up cost: You don’t need much money to start.
  • Flexible schedule: Work when you want.
  • Passive income: You can earn money even when you’re not working.

Affiliate marketing can be a fun and profitable side hustle. Just remember to stay patient and persistent!

You can learn more at What You Need To Know About Affiliate Marketing For Beginners.

This small house we owned had 4 bedrooms and we rented out two of them.

16. Rent out a room in your home

Renting out a room in your house can be a simple way to make extra money. If you have unused space, like a spare bedroom or basement, you can turn it into a rental.

I have had several roommates in the past, and I liked this side hustle a lot.

What I liked about making extra money by renting out a spare room:

  • Extra income to help pay the mortgage
  • If you have unused space, then this can be a good way to fill it

Of course, there are challenges to having a roommate, and it isn’t always perfect. Sometimes, it can be hard to share common spaces (like the kitchen and bathroom), and it can also take time to adjust to someone else’s lifestyle.

Renting out a room isn’t for everyone, but it can provide steady income with minimal effort.

17. Shop at cash back websites

Shopping at cash back websites is an easy way to earn extra money. These sites give you a percentage of your purchase back as cash. You just have to sign up, shop through their site, app, or browser extension, and earn rewards.

I like cash back sites because they are easy to use and you don’t have to pay anything extra for using them.

Shopping through cash back sites can give you a nice little bonus on things you already planned to buy. It’s like getting paid to shop.

My favorite cash back sites are:

  • Rakuten (for online shopping like clothing, home goods, etc.)
  • Upside (for gas)
  • Honey (for online shopping like clothing, home goods, etc.)
  • Fetch Rewards (for groceries)

18. Earn credit card rewards

Using credit cards (the smart way) can help you earn rewards like cash, travel points, and more.

I’ve been using rewards credit cards for years, and now they’re the only cards I use. They help me save money on travel, earn cash back, and more.

By choosing the right credit card and using it wisely, you can enjoy great rewards and make the most of your spending.

Remember, carrying a balance on your credit card can lead to interest charges, which can outweigh the benefits of rewards. Always try to pay off your full balance each month to avoid these fees.

You can see my favorite credit card rewards at Best Rewards Credit Cards For This Year | What You Need To Know.

19. Brand ambassador

Being a brand ambassador is one of the more popular side hustles.

You represent a company and help promote its products. Often, you act as a public spokesperson. You can find opportunities on Facebook and many cities have brand ambassador groups where gigs are posted.

Brand ambassadors can earn between $15 to $20 per hour. Some high-end gigs can pay up to $100 per hour.

Benefits of this side hustle include flexible hours and the chance to work for brands you like. You may be able to get free products or swag, too, and this is one thing I really liked about being a brand ambassador in the past.

20. Newspaper delivery

Delivering newspapers can be an easy way to make money. It’s a job you can do before school or work, and it lets you get exercise too. You may drive, ride your bike, or walk to each house and leave the newspaper by the door.

The benefits of newspaper delivery include:

  • Exercise: If you walk or ride your bike, you can get plenty of fresh air and exercise.
  • Scheduling: Most routes are in the early morning, so you still have the rest of the day free.
  • Tips: Some customers might give you tips during holidays or for good service.

But, there are some downsides, with the main one being that you typically have to wake up really early for this job. For newspaper delivery, you usually have to wake up very early in the morning, often around 3:00 to 5:00 AM. The exact time depends on how big your delivery route is and what the newspaper company requires. The goal is to have all the newspapers delivered by the time most people wake up, usually around 6:00 or 7:00 AM, so starting early is really important.

The other main negative is that a big collection of newspapers is, of course, heavy!

When I was younger, I helped a friend’s family with their newspaper run whenever I slept over at their house. They used their van to deliver a bunch of newspapers, and I got to tag along.

21. Help others with their resume

Helping others with their resume can be a rewarding side hustle. You can earn extra money while also making a big difference in someone’s job hunt.

When I was in my last year of college as well as about a year after I graduated, I helped several people with their resumes. I didn’t charge a lot (and many times worked for free or for a free meal), but I liked looking at resumes and finding ways to make everything sound better.

I was also really good at it and it came so easy to me!

Some benefits of this side hustle include:

  • Flexibility: You can do this from home.
  • High demand: Many people need help with their resumes.
  • Work at your own pace: There’s no rush, and you can take on as many clients as you want.

By helping others with their resumes, you can earn money and provide help. It’s a great way to use your skills and make a difference in someone’s life.

22. Enter contests and giveaways

Entering contests and giveaways can be a fun and rewarding side hustle. You will definitely not win every time, but the more you enter, the higher your chances. People have won cash, gift cards, vacations, and electronics through these events.

You can spend a little time each week entering different contests. You can find them online, on social media, and in emails from brands you follow. Some people set aside about an hour each week to enter as many as they can find.

I found success this way. For example, I once won $10,000 from a financial blog’s anniversary contest, and this was a major win early on in my side hustle journey.

Remember, entering contests should be fun. Think of it as a hobby that could pay off with some great surprises. You most likely won’t get rich nor win the lottery doing this.

This is a screenshot from this month. I earned around $300 playing games on my phone.

23. Rewards sites (GPT sites)

Rewards sites, also known as GPT (Get-Paid-To) sites, are platforms where you can earn money by doing simple tasks online.

Tasks you might do include:

  • Taking surveys
  • Reading emails
  • Playing games
  • Shopping online
  • Trying new apps and services
  • Clicking ads

Rewards sites have been around for a while and have proven to be a reliable way to earn some extra cash. Though the payouts are often small, they can add up over time. For instance, Swagbucks has paid out over $80 million to its users.

Using multiple sites can help maximize your earnings. It’s easy to do tasks during your free time, making it a flexible way to earn money without a huge time commitment.

It’s key to choose reputable sites to make sure that you get paid for your efforts, so I recommend that you stick with popular, well-reviewed platforms to avoid scams.

Rewards sites will most likely not replace a full-time income, but they can be a fun way to get some extra spending money.

Here’s a quick list of the best GPT sites:

24. Test websites (User Testing)

Testing websites, also known as user testing, is a popular side hustle. You get paid to visit a website or app and give feedback on your experience.

You will need a computer, a reliable internet connection, and sometimes a microphone.

User testing is flexible. You can do it in your free time from the comfort of your home. This side hustle is great if you like trying new things and providing feedback.

I have personally been paid to do user testing in the past, as well as paid others to do user testing on this very website, Making Sense of Cents. I thought it was an easy side hustle where you just share what you honestly think of a website.

25. College textbook resale

Selling your college textbooks is a great way to make some extra money.

When I was in college, I sold all of my college textbooks once I was done, and I always tried to make the most money (so, that typically meant that I never sold it directly back to my college bookstore, because they usually paid the least amount).

Reselling college textbooks as a side hustle has its ups and downs.

On the plus side, there’s a high demand for cheaper, used textbooks, so you can make good money if you buy low and sell high. It’s easy to start, especially if you begin with your own used books, and it’s a great way to encourage reusing materials.

But the market is seasonal, with most demand at the start of each semester, so your income might be inconsistent. New editions can come out, making older books less valuable, and storing a lot of books can be tough. Plus, shipping heavy textbooks can cut into your profits if you’re not careful.

Recommended reading: 17 Best Places To Sell Used Books For Cash

Frequently Asked Questions

Below are answers to common questions about finding the best side hustle.

What are the top side hustles that can bring in good money?

Top side hustles that can bring in good money include freelancing, blogging, flipping items for resale, and renting out rooms in your home.

How can I find side hustles that pay me every week?

You can find weekly pay side hustles through gig economy platforms like Uber, Lyft, and DoorDash. Freelancing on websites like Upwork or Fiverr might also pay weekly, depending on your agreement with clients. Another option is finding part-time jobs at local businesses that pay weekly wages.

Can you suggest some side hustle ideas I can do from my house?

There are several home-based side hustles. You can start freelancing in areas like writing, graphic design, or social media management. Another idea is to sell virtual assistant services. Teaching online courses or tutoring students in subjects you excel at is also a great way to earn from home.

What side jobs are out there for someone with no experience?

There are many side jobs for beginners. You can try pet sitting or dog walking through apps like Rover. Babysitting is another option if you like spending time with children. Delivery driving for companies like Uber Eats or Instacart doesn’t require much experience and can be started quickly too.

My Favorite Side Hustles – Summary

Now that we have gone over my full list, I want to talk about one of the main deciding factors of a side hustle.

Your time is important. Some side jobs take a lot of time but don’t pay well, while others pay more with less time.

Think about how much free time you have after your main job and how much money you want to make. This balance is very important. Track the hours you work and the money you earn to see if it’s worth it. The best side job fits into your life without stressing you out.

Also, another important deciding factor is choosing a side hustle that aligns with your skills and lifestyle. If you’re good at something, you’re likely to enjoy it more and perform better.

So, I recommend thinking about your current skills and hobbies. Matching your side hustle to your skills makes it easier and more enjoyable. Plus, you’re more likely to find success and earn extra income.

What’s your favorite side hustle?

Source: makingsenseofcents.com

Apache is functioning normally

At the risk of jinxing it, things are looking up for home buyers.

The average rate on a 30-year fixed rate mortgage has dropped for three consecutive months (and counting). Competition has calmed down a bit — and inflation has, too. And while we’re still technically in a sellers’ market, the inventory of homes for sale in June reached its highest level in more than four years.

Hoping to buy in 2024? If you’re well prepared with a budget and a mortgage preapproval, you might not even need to knock on wood. Let’s look at the good news, the challenges and the wild cards that remain for home buyers this year.

Good news: Mortgage rates drop to a one-year low

Finally, some relief: In the week ending Aug. 15, 30-year mortgage rates dropped to an average 6.28%, their lowest weekly average since February 2023. That’s welcome news for shoppers who have felt burned by high rates — or maybe even put their house hunt on ice until the cost of borrowing cooled down.

Over the past two years, buyers have been at the mercy of mortgage rates’ meteoric rise, holding on as the average 30-year fixed rate climbed from 3% to nearly 7% in 2022. In October 2023, rates topped 8% for the first time since 2000 — a surprise even many top economists didn’t predict. Higher interest rates make it more expensive to get a mortgage.

To put that in perspective: Let’s say you can afford $1,800 per month in principal and interest. At a 7% interest rate, you could afford to borrow $270,600. But at a 6% interest rate, you could afford to borrow $300,200 — nearly $30,000 more — for the same amount per month. When interest rates go down, home shoppers’ purchasing power goes up.

For now, economic signals suggest more positive news for buyers in the latter half of 2024. Dan Moralez, regional vice president at Dart Bank in Holland, Michigan, points to a cooling economy and a potential cut to the federal funds rate. “All of that stuff really lends itself to mortgage rates getting better and the cost to borrow getting cheaper, which is really good for those people who have maybe sat on the sidelines hoping to see rates get better,” Moralez says.

More good news: It’s nearly certain the Federal Reserve will cut the federal funds rate by at least 25 basis points at its next meeting Sept. 17-18, according to CME Group’s FedWatch tool. (A basis point is one one-hundredth of one percent.) While the Fed doesn’t set mortgage rates directly, the federal funds rate influences the cost of long-term loans, including mortgages.

Your strategy: If you’re ready to buy, jump in now

A potential Fed rate cut is welcome news, but in the meantime, it’s not a reason to put off your search. Changes take time to trickle down, so avoid the self-induced pressure of timing the market perfectly. Instead, focus on shopping within your budget right now.

Also: When rates go down, competition goes up — another reason there’s no time like the present to start house hunting.

Whichever way rates move in the remainder of 2024, you’ll save money if you shop around. Aim to get an estimate from at least three mortgage lenders. The Consumer Financial Protection Bureau estimates borrowers can save $100 per month (or more) this way. And look at the annual percentage rate, or APR, to understand the total cost of the loan, which includes fees and other charges.

One final tip about rates: Do your research before picking a mortgage lender with the flashiest discount. This year, some lenders have been advertising “buy now, refinance later” offers. Others are offering temporary buydowns, where the buyer’s effective monthly payment is reduced for a year (or a few). Each option could potentially save money, but Moralez says it could also be “smoke and mirrors” if the deal is offset by higher fees.

“It’s one of those things where I tell folks, ‘There’s no free lunch, OK?’” he says. “You know, somebody is paying for it somewhere.”

Good news: More inventory, less intense competition

Recently, the supply of homes for sale could be summed up in two words: Slim pickings.

But in June, shoppers got some good news: The number of existing homes for sale reached a four-year high, according to the National Association of Realtors (NAR). Nationwide, there was a 4.1-month supply of homes for sale, meaning it would take just over four months at the current pace for all properties to sell. The U.S. market hasn’t seen that much housing inventory since May 2020, when the supply was 4.5 months.

Demand still outpaces supply, but with more homes to choose from, buyers are less likely to encounter intense bidding wars reminiscent of the pandemic years. Houses for sale are getting fewer offers compared to last year, according to the NAR’s June 2024 Realtors Confidence Index, a survey of its members. In June, a home listed for sale received an average 2.9 offers, compared to 3.5 offers in June 2023.

Another sign of cooling competition: Houses are staying on the market longer. In June, 65% of homes sold in less than a month, compared to 75% at the same time last year. The median time on the market in June was 22 days, a full four days longer than June 2023, when the median time on the market was 18 days.

With pending home sales also on the rise in June, NAR Chief Economist Lawrence Yun says he expects to see even more houses getting listed ahead of typical seasonal declines in winter. “The rise in housing inventory is beginning to lead to more contract signings,” Yun said in a news release. “Multiple offers are less intense, and buyers are in a more favorable position.”

Your strategy: Cast a wide net

While an improvement from recent years, a 4.1-month supply of homes for sale is still technically a seller’s market. A balanced market has about a six-month supply of homes for sale; a buyer’s market has more than six months’ worth.

You can’t control who puts their house on the market, so in the meantime, focus on the options available now. Let go of the fantasy of finding the perfect home when a “good enough” home can get your foot in the door sooner. That’s especially true for first-time home buyers who are eager to build equity.

“Last year, we certainly didn’t have enough houses — and we still don’t,” says Ellie Kowalchik, a real estate agent who leads the Move2Team with Keller Williams Pinnacle Group in Cincinnati, Ohio. “Don’t wait until the spring to start looking.”

For now, maybe you expand your search to include condos or townhouses. Maybe you settle for fewer bathrooms or a dated interior. Keep your chin up — even if you have to tolerate less square footage or weird linoleum floors for a while, you’ll have equity to remodel or sell in a few years.

Still challenging: Home prices climb to record highs

While some aspects of homebuying have gotten easier as 2024 rolls on, one challenge remains: home prices. The sales price of existing homes has risen for 12 straight months, according to the NAR. In June, the national median sales price hit a record high of $426,900.

As more inventory hits the market, though, the degree of home price growth has slowed somewhat over the summer, according to an August 2024 report from ICE Mortgage Technology. Still, if you compare the cost of buying a house to the median household income, July 2024 was one of the least affordable months to buy a home in more than three decades. Why? Home prices are growing faster than wages, and on top of that, high mortgage rates increase the cost of borrowing.

Until supply catches up to demand, prices are unlikely to fall. Realtor.com estimates prices will fall less than 2% by the end of 2024. No one can predict exactly what the market will do, but if you’re an optimist, there’s reason to be hopeful that prices are reaching a plateau.

“Even as the median home price reached a new record high, further large accelerations are unlikely,” Yun said in a press release. “Supply and demand dynamics are nearing a balanced market condition.”

That’s another reason to jump in now: A big drop in prices could trigger more competition.

Your strategy: Make a budget and stick to it

If you’re Zillow-stalking houses you can’t afford, stop. Instead, channel that energy toward your plan to shop for a house in real life — starting with setting a realistic budget.

First, talk to a financial advisor or use an online calculator to see how much house you can afford. Understand how mortgage lenders will determine your eligibility, including analyzing your credit score, cash savings and monthly debt payments.

Next, find a buyer’s agent who knows how far your budget can go in your local market. An experienced agent can advocate for you and help you snag a good deal.

Wild card: Changes to real estate commissions

One of the year’s biggest shakeups has been a major legal settlement with the NAR, which changes the way your buyer’s agent gets paid. While the NAR admitted to no wrongdoing, it will pay $418 million to settle more than a dozen antitrust lawsuits accusing the organization of enforcing rules that inflated real estate commissions. These changes take effect Aug. 17.

Previously, home sellers generally set the agents’ commission — typically 5% to 6% of the home sale price that was then split between the buyer’s and seller’s agent. Now, a new system is in place: You’ll have to sign a contract with your buyer’s agent, which spells out the terms of how they get paid.

For now, many real estate brokerages will likely stick with the familiar commission structure of a percentage of the sales price. But the settlement opens the door for new ways for agents to get paid, such as a flat fee or an hourly rate. Time will tell what becomes the new standard.

Your strategy: Brush up on your negotiating skills

When hiring a buyer’s agent, be polite but firm when negotiating. If the commission is more than you want to spend, ask if the agent would be willing to lower it. Point out any fees you don’t understand. And if you still aren’t comfortable with the terms, it’s OK to shop around or walk away.

While the new rules are more complex, they also give you, the buyer, more leverage in negotiating for your best interests. Buying a home is a big journey, and when you sign that contract with a buyer’s agent, you should feel supported and empowered about the business relationship that lies ahead.

The bottom line: Set realistic expectations

Things are looking better compared to the beginning of this year, but if you haven’t found a house yet, it’s fair to feel bummed out about high costs and complexity.

The solution: Think long-term. Holding out for lower rates or “perfect” buying conditions likely means you’ll face steeper prices and more competition. So if you’re determined to buy, find a place that suits your needs and budget as-is. Expecting perfection often means setting yourself up for disappointment.

“Sometimes I have clients that think they’re going to hit a home run the very first house they buy,” Moralez says. “And a lot of times I tell clients, well, sometimes it’s OK to be happy just getting on base.”

Source: nerdwallet.com

Apache is functioning normally

When electioneering, the best pledges are catchy enough to get stuck in a voter’s head. During this election, “no tax on tips” seems to be the phrase fitting that bill.

Both presidential candidates are embracing the promise to exempt workers from paying taxes on their tips. But the problem with no-tax-on-tips proposals, experts say, is that they’re clearly a bid for votes rather than a substantive solution to address the fundamental needs of tipped workers.

“This wouldn’t help very many workers, and it could actually be very harmful to millions more, with the real benefits of this policy change going to employers and the wealthy at the expense of working people,” says David Cooper, researcher from EPI Action, a nonpartisan research and advocacy organization.

How a no-tax-on-tips promise entered the election

On June 9, former President Donald Trump made a promise to end taxes on tips in front of service workers in Las Vegas. Last weekend, in Las Vegas, Vice President Kamala Harris made a similar pledge. It’s no coincidence that both candidates made the announcement in Las Vegas — leisure and hospitality is the dominant industry in the metro area, Bureau of Labor Statistics data shows.

On Monday, White House press secretary Karine Jean-Pierre said that President Joe Biden also supports eliminating taxes on tips for service and hospital workers, as well as raising the minimum wage.

The policy is undeniably appealing for tipped workers and the unions that represent them. After all, who doesn’t want a tax break when they can get it? Experts say the message to voters may be effective, but the policy is less likely to be.

“I’d say, thumbs down to the policy proposal; it’s bad tax policy,” says Kyle Pomerleau, a senior fellow studying federal tax policy and reform at American Enterprise Institute, a right-leaning think tank.

How do tips factor into wages?

Tipped workers are some of the most visible workers: They’re taking your coffee order, cutting your hair, serving your meals in restaurants, delivering your groceries and ridesharing you around town. And yet, the Budget Lab at Yale University estimates there are only about 4 million workers in tipped positions in 2023 — about 2.5% of the entire U.S. workforce.

The most typical tipped work is in the service and hospitality industry. Tipped workers also tend to be younger than the rest of the working population — 20 to 34 years old, according to Yale Budget Lab.

In order to qualify as a tipped worker, you must earn more than $20 per month in tips. In tipped positions, workers must receive a subminimum wage, also known as a cash wage, of $2.13 per hour. A subminimum wage is combined with tips in order for workers to earn at least the federal minimum wage of $7.25 per hour. If an employee earns a subminimum wage plus tips less than $7.25 per hour, an employer must make up the difference.

There’s also something called tip pooling that’s often done in restaurants; it’s where the front of the house (servers and bartenders) share their tips with each other, as well as with the back of the house (such as cooks and dishwashers). In this scenario, all employees who receive pooled tips — including the workers who earn the tips — must make at least the federal minimum wage, according to the Department of Labor.

It’s unclear how often restaurants properly adhere to wage rules because tipping is notoriously underreported. Although, that’s less of an issue now since most people pay electronically and don’t leave cash tips as often anymore, says Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute.

How do taxes on tips work?

Median weekly wages, including tips, are $538 among tipped workers, compared to a median of $1,000 among non-tipped workers, according to 2023 estimates by Yale Budget Lab. Many tipped workers earn so little they already aren’t required to pay federal income taxes; Yale Budget Lab estimates this is the case for about 37% of tipped workers.

It’s likely only a small sliver of the tipped worker population would get the tax advantage that Trump and Harris propose — and that’s without knowing what specific income limits would be set by either candidate’s plan.

“Think about somebody who is a server at ‘Bob’s Diner’ — it has a $9.95 special and [the server] is going to get two bucks,” says Gleckman. “If you’re a server at some fancy downtown steakhouse where dinner is $200, you’re going to get 40 bucks, right? So for those higher income servers, this [policy] can make some difference. But for most people, it won’t really matter at all.”

There’s another important distinction about tips and taxes: Even when workers don’t have a federal income tax obligation, workers and their employers must pay federal payroll taxes, which fund Social Security and Medicare programs. That also means they must continue to report tips, even if federal taxes on tips are eliminated; also, the proposals would not affect state income tax requirements.

Neither Trump or Harris has specified whether their proposals would apply only to the federal income tax. But if the No Tax on Tips Act, introduced by Sen. Ted Cruz (R-Texas), is any indication, the exemption would likely only apply to federal income taxes.

How much would no-tax-on-tips save a typical tipped worker?

Tip earnings are hard to characterize since the amount varies drastically based on the type of service that workers provide, as well as local minimum wage laws. But the Tax Foundation offers an example: Say a server earns $19,000 per year in wages plus $15,000 in tipped income. Their adjusted gross income is $34,000. They take a standard deduction of $14,600, which leaves them with $19,400 in taxable income. Under this example they owe $2,096 in federal income taxes.

With a no-tax-on-tips policy in effect, their adjusted gross income is $19,000 since the $15,000 income in tips isn’t considered taxable. They take a standard deduction of $14,600, which leaves them with $4,400 in taxable income. Under this example, their tax liability is $440. It’s the difference of $1,656 from the previous example.

As the Tax Foundation points out, a cashier who makes the same $34,000 — without tips — would have the same $2,096 federal tax liability in either scenario, and so would be paying vastly more in taxes than the server under a no-tax-on-tips policy.

Experts say no taxes on tips is bad policy

Suffice to say, tax and wage experts are unimpressed with the no-tax-on-tips proposal.

“This wouldn’t help very many workers, and it could actually be very harmful to millions more, with the real benefits of this policy change going to employers and the wealthy at the expense of working people,” says Cooper.

Here are some reasons why experts say exempting tips from taxes could have negative repercussions, depending on how the policy is structured.

Social programs and other tax benefits could be impacted

If a no-tax-on-tips proposal includes an exemption for the payroll tax in addition to the income tax, it could impact both worker eligibility for Social Security and Medicaid, as well as the solvency of the program itself, says Cooper.

This scenario isn’t necessarily likely. Even though Trump has not specified if his proposal would apply to both the federal income tax and the payroll tax, Cruz’s No Tax on Tips Act applies the exemption only to the federal income tax. It’s difficult to see Harris applying the exemption to the payroll tax.

But depending on how the law is written, no-tax-on-tips could make it more difficult for workers to get other tax benefits like the earned income tax credit or the child tax credit, experts say.

“If you’re a household with children, those credits phase-in with earned income, meaning that they are larger the more income you earn, up to a certain point,” says Pomerleau. “But if you were to structure this tax exemption as an exemption from adjusted gross income, it would directly interact with the earned income tax credit in the child tax credit and reduce those benefits for households.”

No matter what, says Pomerleau, no-tax-on-tips would add tax complexity for a population of tax filers that, generally, do not have access to accountants to help them through the process. That could result in more workers not filing taxes or not being able to access the benefits they are eligible for.

High earners could find a loophole

A tax exemption on tips leaves open the possibility of exploiting the system. Some in high-income positions like lawyers, for example, could restructure how their earnings are reported to avoid paying taxes on a portion of their income.

“You could envision a lot of scenarios where this would be really grossly abused by highly paid individuals,” says Cooper.

The Harris campaign told The Washington Post that, under her plan, the tax exemption would only apply to workers who earn below a certain threshold in select industries. This would prevent high earners in nontraditional tipping positions from gaming the system. There is currently no bill from Democrats in Congress that matches Harris’ plan.

Trump’s proposal and the No Tax on Tips Act from congressional Republicans doesn’t narrow industry eligibility or impose income limitations.

It could reduce employers’ need to raise wages

The tax benefit presents a double whammy benefit to owners: a tax benefit that appeals to workers and an opportunity to save money by shifting the pay burden from owners to consumers.

“It’s a win-win for restaurant owners, hotel owners, like, for example, Donald Trump,” says Gleckman. “But it’s much more ambiguous and much riskier for tip workers, particularly low-income workers.”

Cooper says this policy won’t incentivize employers to raise raises for workers because there’s a tax benefit inherent to the job. But it could incentivize businesses to reclassify certain positions as tipped occupations.

“The tipping system, as it currently exists, is rife with wage theft and discrimination,” says Cooper. “It opens up workers to abuse from customers and colleagues because they feel like they have to tolerate bad behavior, lest they put their kids at risk. So this [policy] would grow a system that is problematic in a lot of ways and spread it to more occupations. That’s not something that we should be incentivizing.”

The deficit would increase, although not substantially

Tax cuts lead to a decline in revenue, which could, over time, exacerbate the federal deficit; it’s currently about $1.52 trillion, according to the U.S. Treasury. The Committee for a Responsible Federal Budget estimates the cost of exempting tips from federal income tax would be $100 to $200 billion over a decade. If tips are also exempted from payroll taxes, the total could run to $250 billion.

If the policy makes tips exempt from the payroll tax, it would have broader repercussions for Social Security and Medicaid programs, experts say.

“These programs are already facing a fiscal shortfall and will need to be dealt with, in as little as ten years,” says Pomerleau. “If they were to remove $38 billion, potentially from the face of Social Security and Medicare, I would accelerate this problem.”

It could exacerbate tipping backlash

As the CRFB notes, what’s not included in its calculations are changes in tipping behavior, which could result in consumers giving less than they do now if they perceive tipped workers as getting an unfair tax advantage.

A backlash to tipping culture has already resulted in 7% lower tipping among service-sector workers from November 2022 to November 2023, according to a payroll analysis by Gusto, a payroll provider.

It could fuel worker resentment

On the flip side, excluding certain tipped jobs by field or income could stir the pot among workers and the unions that represent them.

Cooper says, “Why would we be giving preferential income tax treatment to this very small subset of workers when there are lots of other hard working, low-paid workers — people providing daycare, childcare, eldercare — that this would do nothing for?”

Gleckman says the policy violates a “cardinal rule of good tax policy,” which is to tax people making the same income at the same level. “I’m not sure I quite understand why a low wage worker somehow should enjoy more benefits than a low wage worker of another kind who’s getting the same income,” says Gleckman. “If you really care for a bunch of low wage workers, there are plenty of other things you could do.”

Unions and businesses groups support no-tax-on-tips

Despite criticism of the no-tax-on-tips proposal, it would benefit workers who are eligible. Adding limitations by industry and income could prevent the exemption from being a regressive one.

Shortly after Harris’ announcement, Culinary Union Local 226 in Nevada endorsed Harris for president and lauded the proposal without acknowledging Trump’s. The union, along with the Bartenders Union Local 165, represents 60,000 workers in Las Vegas and Reno. The Culinary Union argues that the tax exemption could help millions of workers that earn a subminimum wage.

“The fact that many companies pay tipped workers across the country $2.13 an hour is outrageous and ending taxes on tips for service and hospitality workers would significantly help millions of workers provide for their families, including in Nevada,” the union wrote in its press release endorsing Harris.

Businesses that employ tipped workers also support the plan. At least, Cruz’s plan, which would not limit the exemption by industry and income. Two of the biggest associations for the top tipped industries — the National Restaurant Association and the Professional Beauty Association — both endorsed Cruz’s proposal.

“Tipped employees are a critical part of the restaurant industry, and anything that strengthens their economic condition is a positive for them,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association in a press release announcing Cruz’s bill. “The ‘No Tax on Tips Act’ would provide immediate tax relief for more than 2.2 million restaurant employees and their families, putting more money in their pockets at a time when we’re all feeling the squeeze of higher prices.”

Ending the subminimum wage would pack a bigger punch

During the campaign rally in Las Vegas last weekend, when Harris made her promise to end tax on tips, she also said she would raise the minimum wage. What she didn’t promise to do is eliminate the subminimum wage, which would have a bigger impact on tipped workers.

“Why not do something like raise the minimum wage if you really want to improve outcomes for tipped workers in the United States?” says Cooper.

The federal minimum wage for all workers has been $7.25 per hour since 2009. However, 30 states plus the District of Columbia have set minimum wages above that amount. Again, the federal subminimum wage is $2.13 per hour. Right now, 36 states have set minimum wages for tipped workers below the federal minimum wage of $7.25 per hour.

The tipped workers who earn the most, nationwide, are in Los Angeles ($16.78 per hour); Seattle ($17.25 per hour); and New York City, where tipped workers earn $15 per hour with the exception of delivery workers, who earn a minimum of $17.96 per hour.

Other places have eliminated the subminimum wage practice altogether. So far six states have banned subminimum wages for tipped workers, including Alaska, California, Minnesota, Montana, Oregon and Washington.

“It is outrageous that over a million workers in this country are not guaranteed a fair minimum wage in 2024,” the Culinary Union 226 wrote in a release endorsing Harris’ proposal. “Employers across the nation need to take responsibility for paying a real minimum wage and Congress must ensure it.”

Beyond raising the minimum wage, there are other levers that could be pulled to help low wage workers, experts say. That includes expanding income supports like the child tax credit, the earned income tax credit or Medicaid.

Source: nerdwallet.com