25 Best Passive Income Ideas To Make Money in 2025

Oct 26, 2024

Gordon Scott has been an active investor and technical analyst or 20+ years. He is a Chartered Market Technician (CMT).

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Investopedia / Matthew Collins

Passive income is money earned from sources other than a traditional job, requiring little time or effort.

Passive income is money earned from sources other than a traditional job, requiring little time or effort. That includes earnings from rental properties, stock dividends, courses sold online, and other projects where you're not actively involved in the continued generation of revenue. Although you may have had to put time, money, or effort into starting up such ventures, eventually you collect income passively without much work.

Marguerita Cheng, CEO of Blue Ocean Global Wealth and one of Investopedia's 100 top financial advisors, said she's optimistic for those looking for passive income opportunities today. "I think there are more prospects than ever for people to create passive income—from creating courses to writing e-books to affiliate marketing and everything in between," she said.

Let's first understand the difference between active and passive income, then explore 25 passive income ideas for 2025 while discussing the potential earnings of each.

The best passive income sources for you depend on your circumstances. "It is important to consider the following: cash flow constraints and requirements, time horizon, and risk tolerance," Cheng said. "For example, investment real estate may have higher upside potential, but a longer time horizon, require significant financial capital, and exposure to liquidity risk in the short term." Remember to consider your situation—not just what's worked for others.

"Be positive and optimistic while being pragmatic," Cheng said. "You can build upon your success."

With that in mind, here are 25 ways to make passive income in 2025, grouped by type and income potential. Later in the article, we discuss each of these in depth.

Passive income can be a great way to generate some extra cash and supplement regular earnings from your job. If you're interested in passive income, stay away from "get rich quick" schemes found among search results for the term online. Cheng suggests you stay mindful of some common misconceptions about passive income.

"People often underestimate the initial costs of a passive income opportunity and as a consequence may not have adequate liquidity," she said. Cheng gave some examples: "With a franchise, there are certain fixed costs that people will incur before they can experience positive cash flow."

"With investment in real estate, there are mortgage payments, insurance payments, property taxes, maintenance, and management fees involved even if there is no rental income," she said.

Marguerita Cheng, CEO of Blue Ocean Global Wealth and one of Investopedia's 100 top financial advisors, notes that there are many prospects for passive income, but beware of fraudulent offers. "Some red flags include sales pitches that sound too good to be true, as well as 'Act now before this opportunity runs out,'" she said.

There are three main categories of earnings: passive, active, and portfolio income.

While you can receive passive income without regular labor, active or earned income is money you get from direct effort or work. It includes salaries, wages, commissions, tips, or revenue from a business where you provide material participation.

Active income is the primary source of earnings for most individuals and households and also includes making investments that might later generate portfolio or passive income.

Active income is the most common form of income and is subject to standard income tax rates.

Portfolio or investment income is revenue from investments, including dividends, interest, capital gains, and other returns from stocks, bonds, currency exchange, and mutual funds. Unlike active income earned from employment or business activities, portfolio income is based on securities an individual or group owns.

Note that portfolio income is not passive income, although it seems to have many of the same elements. Even though you may wait months or years before reviewing or changing your portfolio selections, an investor is constantly making decisions about buying or holding different securities.

Thus, even if you don't change your portfolio for decades, it's your ongoing choice not to do so that makes income from it not wholly passive. Also, remember that the IRS may treat investment income differently than passive income. We discuss the taxation of these different forms of income below.

The ideas below are streams of income where you can limit your involvement to the beginning of the venture and expend less time or effort afterward. For 2025, we've included ideas that provide recurring income, from leveraging artificial intelligence (AI) to creating products and supporting the green economy.

"I think people can be really creative," Cheng said. Many ideas on this list can be a great way to express your creativity in a way your career might not.

For the purposes of our list below, we're using "passive income" in the more common usage that includes portfolio income within "passive" income (as opposed to the activity of working a job). However, it's important to keep in mind the distinctions for income and tax purposes.

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More sophisticated than basic storage units, premium space sharing through platforms like StoreAtMyHouse lets homeowners monetize specialized spaces in their homes. This upscale space-sharing approach can generate more income than primary storage, particularly in affluent areas or cities where such specialized storage is scarce. The key is marketing to the right audience—wine collectors, art dealers, vintage car enthusiasts, and fashion collectors who need more than just space but specific conditions for their valuable items local storage units can't provide.

Income Potential

1. Climate-controlled spaces: $200-500 per month

2. Vehicle storage: $150-400 per month

3. High-end clothing storage: $100-300 per month

4. Seasonal storage: $75-200 per month

Advantages

Disadvantages

Tips for Success

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Leasing land for solar panel installations has become an increasingly lucrative form of passive income, particularly in sun-rich states like Louisiana, Texas, and California. Utility companies and solar developers lease land from property owners to build large-scale solar installations, offering steady, long-term income with minimal landowner involvement. In many areas, the space they would need might make even a smaller property fit for this purpose.

Income Potential

1. Large-scale installations: $500-2,000 per acre annually

2. Community solar projects: $1,000-4,000 per acre annually

Advantages

Disadvantages

Tips for Success

Perhaps the oldest way to earn passive income on this list. You would invest in property to rent or sell at a profit. Consider different markets and property types for the best investments.

Rental properties provide steady monthly income. The exact amount depends on the property's location, size, and local rental market conditions.

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Renting your property, entirely or partially, can provide regular rental income. This could include short-term rentals through platforms like Airbnb or long-term leasing.

Income Potential

1. Short-term rentals (e.g., Airbnb): $100 to $300 per day

Short-term rentals can be highly profitable, especially in popular tourist destinations. The income depends on the location, property type, and occupancy rate.

2. Long-term rentals: $1,000 to $2,500 per month

Long-term rentals provide steady monthly income. The exact amount depends on the property's location, size, and local rental market conditions

Advantages

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With the boom in recreational vehicle purchases and limited homeowner's association (HOA) restrictions on storing them, providing specialized vehicle storage has become a profitable passive income opportunity. This niche offers higher returns than traditional storage units, particularly when offering climate control or enhanced security features.

Income Potential

1. RV and motorhome storage: $100-500 monthly per space

2. Boat storage: $200-600 monthly

3. Classic or luxury car storage: $300-1,000 monthly

4. Seasonal recreational vehicles: $100-300 monthly

Advantages

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Wind energy companies lease land from property owners to install wind turbines, offering another green energy passive income opportunity. This option is particularly attractive in areas with consistent wind patterns, such as the Great Plains states, Texas, and parts of the Midwest.

Income Potential

1. Per turbine payments: $4,000-8,000 annually

2. Land lease payments: $3,000-7,000 per megawatt of capacity

Advantages

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Offer items you own, like tools, specialized equipment, or even your car, for rent to others. This can include anything from gardening tools to camping gear.

Income Potential

1. Equipment and tools: $25 to $150 per day per item

2. Vehicles: $40 to $100 per day

Advantages

Disadvantages

Tips for Success

REITs allow investors to buy shares of a fund of multiple commercial properties. They offer higher yields than individual bonds but come with management fees. REITs can also earn more or less money depending on interest rates and the state of the real estate market.

Income Potential

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Tips for Success

Bonds, bond ladders, and bond funds are popular investment vehicles that can provide investors with a predictable stream of income and potentially lower risk compared with stocks.

Income Potential

1. Government and corporate bonds: 2% to 5% annual yield

2. Bond funds: 2% to 6% annual yield

Advantages

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Tips for Success

Dividend-paying stocks provide investors with a steady income stream through regular payments, which can be reinvested or used to supplement other income sources.

Income Potential

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Lending money through peer-to-peer lending platforms like LendingClub and earning interest can earn you more than you would from a traditional savings account.

Income Potential

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Index funds are among the most popular investments (see the chart below), with passive exchange-traded and mutual funds offering easy ways to earn passive income.

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Share your expertise by designing and selling courses in your field of knowledge. Platforms like Udemy are a popular choice. While putting a course up with lectures, quizzes, and so on is a lot of work upfront, some courses resonate and earn their creators money for years.

Online courses can offer depressingly low income, given the work and expertise you put into them, or highly profitable, especially if they cover in-demand skills or topics. Platforms like Udemy and Teachable facilitate course creation and sales. Some platforms offer subscription models where users pay a monthly fee for access to all courses. You get a small percentage of this.

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Run an ecommerce store without holding inventory using a dropship model. This involves selling products without holding inventory. The income depends on the products and marketing efforts.

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You can take your favorite interests, like travel, and use social media to earn extra income. "If you enjoy travel...writing a travel blog takes time, energy, and commitment—you could consider creating a YouTube channel," Cheng said.

While most who earn money from YouTube have a constant presence, you may have an idea for content that fits a perennial need and can earn you income from ads, sponsorships, or affiliate marketing.

Income Potential

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Develop a mobile app and generate income through sales or ads. This requires some technical skill but can be highly rewarding if the app meets a market need.

Creating a successful app can generate significant income through sales and in-app purchases. The income depends on the app's popularity and monetization strategy. Many apps, of course, find little interest given the many found in the app stores.

Income Potential

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Create AI-driven applications and tools that create revenue through automated language learning tools, tutoring apps, or games. You can also earn through in-app purchases.

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Designing and selling custom products like t-shirts, mugs, and phone cases can be profitable. Platforms like Redbubble, Etsy, Shopify, and Teespring facilitate this process.

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Affiliate marketing involves promoting products and earning a commission on sales. The income depends on the number of sales and the commission rate.

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Adela Grigorita / Getty Images

"If you enjoy travel, you can consider taking pictures and selling them online," Cheng suggested. You can earn royalties by selling your photography to stock photo websites like Shutterstock or Adobe Stock.

Income Potential

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Licensing music for use in films, commercials, and other media can be profitable. The income depends on the demand for the music. In the age of Spotify and AI musical creation, you'll have to find a niche that isn't easily repeatable.

This can be through platforms like AudioJungle or by directly licensing to content creators and businesses. "One of my clients' passions is music," Cheng said. "In retirement, he is earning passive income from creating and selling stock music."

Income Potential

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Turn your vehicle into a moving billboard for businesses using services like Wrapify or Carvertise.

Income Potential

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Buy products at a lower price and resell them for a profit, commonly through online marketplaces like eBay or Amazon.

Income Potential

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Offer a subscription service for a curated box of goods, focusing on a specific focus like beauty products, food items, or your favorite hobby.

Income Potential

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Buy and place vending machines in strategic locations for passive revenue. Ideal locations include high-traffic areas like malls, offices, or schools.

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Passive income is revenue you get from neither your portfolio nor wages and does not require an ongoing effort. The term “passive income” is frequently used loosely for any revenues, including investment returns, that appear to require little or no effort by the one receiving it.

The IRS, which gets the last word on this when you're filing your taxes, rules out the following as passive income: “interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business,” income tax refunds, and income derived from the cancellation of debt.

Meanwhile, the agency defines passive or unearned income as “net rental income,” income from a “business in which the taxpayer does not materially participate,” and, in some cases, self-charged interest.

When you record a loss on a passive activity, only passive-activity profits can have their deductions offset instead of the income as a whole. It would be prudent to ensure that all your passive activities were classified that way to make the most of the tax deduction. These are allotted and applied to account for the next year’s earnings or losses.

To save time and effort, you can group two or more passive activities into one larger activity if you form an “appropriate economic unit,” according to the IRS. When you do this, instead of providing material participation in several activities, you only have to provide it for the activity as a whole.

In addition, if you include several activities in one group and have to dispose of one of those activities, then you’ve only done away with part of a larger activity as opposed to all of a smaller one.

The organizing principle is that if the activities are located in the same geographic area, if the activities have similarities in the types of business, or if the activities are somehow interdependent, they can be grouped.

Let's deal with the specific types of income with special tax considerations:

Investing in a business where you don’t materially participate offers the potential for passive income. This typically involves putting capital into a venture without involvement in its day-to-day operations or management decisions. The key is that your role is not active; your involvement is primarily financial.

This kind of investment can appeal to those who want to diversify their income streams but don’t have the time to engage in a business themselves. The returns are usually generated through profit-sharing, depending on the entity's business, allowing you to benefit from its activity without the demands of actively managing a business whose trade you may know little about.

Here’s an example. Suppose you put $500,000 into a candy store with the agreement that the owners would pay you a percentage of the earnings. This would be considered passive income as long as you do not participate in the operation of the business beyond investing.

If you help manage the company or take up the tasty role of eating each type of candy to recommend what to stock, your efforts may count as “material “participation.”

Here are the IRS’s criteria for material participation:

Rental properties are defined as passive income with a couple of exceptions. If you’re a real estate professional, any rental income that you’re making counts as active income. If you’re self-renting, meaning that you own a space and rent it out to a corporation or partnership where you conduct business, that also doesn't constitute passive income. (That's unless the lease was signed before 1988.)

Income from leasing land does not qualify as passive income, either. However, a landowner can benefit from passive income loss rules if the property nets a loss during the tax year.

When money is lent to a partnership or an S corporation acting as a pass-through entity (essentially, a business designed to reduce the effects of double taxation) by the corporation's owner, the interest income on that can qualify as passive income.

Yes, losses from one passive activity can generally be used to offset income from other passive activities. For example, if you incur a loss from a rental property, that loss can usually be used to offset passive income from a limited partnership. However, there are rules and limitations, such as passive activity loss limitations, so it's important to consult with a tax professional for specific advice on your situation.

Passive income is frequently defined loosely as earnings derived from activities that don’t require active participation. However, interest, dividends, and capital gains are not classified by the IRS as passive income. Instead, they fall under the category of portfolio income.

There are plenty of ways to generate passive income. Examples include renting out a space, such as a bedroom or an entire house, investing in securities that pay dividends or interest, and selling goods and services online as a side hustle.

Passive income can be derived over time using different means. From renting out property and leveraging automated technologies to creating digital content, these avenues offer the potential for sustainable financial growth.

While each method carries its own set of risks and rewards, the key to successful passive income lies in initial strategizing and occasional monitoring. As we move further into an era where traditional income models are being supplanted by gig and other non-traditional forms of work, many are finding they need more flexible income streams as they work toward a more secure financial foundation for themselves.

Internal Revenue Service. “Publication 925, Passive Activity and At-Risk Rules.”

Internal Revenue Service. “Unearned Income.”

US Light Energy. "Leasing Land for Solar Farm: Your Ultimate Guide."

Purdue University. "A Landowner's Guide to Commercial Wind Energy Contracts."

ProShares. "Dividend Aristocrats ETFs."

Internal Revenue Service. “Topic No. 425 Passive Activities—Losses and Credits.”

Internal Revenue Service. “Publication 925: Passive Activity and At-Risk Rules.” Page 8.

Internal Revenue Service. “Publication 925: Passive Activity and At-Risk Rules.” Page 5.

Internal Revenue Service. “Publication 925: Passive Activity and At-Risk Rules,” Pages 3–4 and 12.

Internal Revenue Service. “Publication 925: Passive Activity and At-Risk Rules,” Page 6.