I feel like in terms of tax "rates", the only major difference here is that hobby income doesn't need self-employment taxes. In contrast, with business income, since you don't have an employer paying half the employment taxes, you are on the hook for it all.
The big difference between hobby stuff and business stuff is where you report it, and what you can and can't do with each. The basic idea is that business are for-profit ventures, while hobbies are not. So, with a business, you are able to deduct more expenses related to the business (and even take a loss that can offset income from other sources), but with a hobby, you are limited to the income earned from the hobby. (You can't just do a hobby and lose a bunch of money at it, and then reduce the rest of your taxable income down.) But the second issue with hobbies is that while the income from a hobby increases gross income, your hobby expenses are itemized (which, if you don't even have enough expenses to itemize, means you're wasting it), and even more, they are subject to threshholds before you can deduct...
So, I would say generally, you want to try to report on Schedule C (Profit or Loss from Business) would say it's generally not a problem to report youtube earnings on Schedule C (Profit or Loss from Business)...but if every year, you're reporting losses on your youtube channel, then the IRS might flag this. (There's so little money in going after most youtubers though, so I doubt there would be an audit.)
(P.s., although i do work as a tax accountant, I do NOT do personal income tax work, so this message may not be 100% correct. I am not your tax accountant.)
