If you sell online or get paid through an app, you have probably heard three different versions of the “1099-K rule” in the last two years — $600, then $2,500, then something else. Here is the clean version: Congress repealed the low thresholds. For both the 2025 and 2026 tax years, the federal reporting threshold on payment apps is back to the old standard of more than $20,000 in payments and more than 200 transactions.
This came from the One Big Beautiful Bill Act, signed into law on July 4, 2025, which struck the $600 threshold created by the American Rescue Plan Act of 2021. The IRS confirmed the change in updated Form 1099-K FAQs. Below is exactly who gets a form, who doesn’t, and why it barely changes what you actually owe.
What changed, in plain English
Third-party payment platforms — Venmo, PayPal, Cash App, plus marketplaces like eBay, Etsy, StubHub, and processors like Stripe and Square — are required to send you (and the IRS) a Form 1099-K when your business payments cross a reporting threshold. That threshold has been a moving target:
| Tax year | Federal reporting threshold | Status |
|---|---|---|
| 2023 and earlier | Over $20,000 and 200+ transactions | Original rule |
| 2024 | $5,000 (no transaction minimum) | IRS phase-in year |
| 2025 | Over $20,000 and 200+ transactions | Restored by law |
| 2026 | Over $20,000 and 200+ transactions | Restored by law |
The planned $2,500 threshold for 2025 and the $600 threshold for 2026 are no longer in effect. Both were repealed before they ever took hold. Note the “and” in the current rule: you generally need to clear both the dollar amount and the transaction count on a single platform before that platform is required to issue a form.
Who actually gets a 1099-K
You should expect a Form 1099-K for the 2025 and 2026 tax years if, on a single payment platform, your goods-and-services payments exceed $20,000 across more than 200 separate transactions. A few important clarifications:
- Personal payments don’t count. Splitting a dinner bill, chipping in for a group gift, or reimbursing a roommate on Venmo or Cash App is not reportable — as long as it’s flagged as a personal (friends-and-family) transfer, not a goods-and-services payment.
- The threshold is per platform. $12,000 on PayPal and $12,000 on Etsy is $24,000 total, but neither platform alone crosses $20,000, so you may not receive a form from either.
- Some states set lower thresholds. Maryland, Massachusetts, Vermont, Virginia, and others require reporting at $600 or $1,000 regardless of the federal number. If you live in one of those states, you can still get a 1099-K on relatively small amounts.
- Platforms can send one anyway. Nothing stops a company from issuing a form below the threshold, and many do to stay safe.
Worked example 1: The casual seller
Maria sells old furniture and clothes on eBay and gets paid through the app. In 2025 she took in $4,300 across 60 sales. She’s nowhere near $20,000 or 200 transactions, so eBay won’t send a federal 1099-K. But she still may owe tax — more on that below.
Worked example 2: The side-hustle that crosses the line
Devon runs a weekend photography business and collects payments through PayPal. In 2025 he booked 240 sessions totaling $31,000. He clears both the $20,000 and the 200-transaction bars on one platform, so PayPal will issue him a 1099-K reporting the full $31,000.
Worked example 3: The bill-splitter
Priya sends and receives about $9,000 a year on Venmo — all rent splits, group trips, and paying friends back. Because these are personal transfers, none of it is reportable, no matter how many transactions there are.
The part everyone misses: a form is not the tax
This is the single most important thing to understand. Whether or not you receive a 1099-K, income from selling goods or services is still taxable. The threshold only controls the paperwork — it does not create or erase your tax obligation. Maria in the example above still has to report any profit she made, even without a form.
The flip side: selling personal items at a loss (your used couch for less than you paid) generally isn’t taxable income, but you may need to report it and then zero it out so the IRS doesn’t assume the full amount was profit.
What to do now
- Separate business from personal. Use the “goods and services” setting for business, and keep personal transfers clearly personal. Consider a dedicated account for your side hustle.
- Keep your own records. Track what you received, what you paid for inventory or supplies, and your net profit. Your records — not the presence of a form — determine what you report.
- Save receipts for cost basis. If you resell items, proof of what you originally paid lets you report only the actual gain.
- Don’t ignore a form you weren’t expecting. If a 1099-K shows up, the IRS got a copy too. Reconcile it with your records rather than leaving it off your return.
Frequently Asked Questions
Is the $600 1099-K rule really canceled?
Yes. The One Big Beautiful Bill Act, signed July 4, 2025, repealed the $600 threshold from the 2021 American Rescue Plan Act. The federal threshold returned to over $20,000 and more than 200 transactions, and that applies to the 2025 and 2026 tax years.
Will Venmo, PayPal, or Cash App still send me a 1099-K in 2026?
Only if your goods-and-services payments on that platform exceed both $20,000 and 200 transactions for the year — or if you live in a state with a lower threshold, or the platform chooses to send one voluntarily. Purely personal transfers never trigger a form.
If I don’t get a 1099-K, do I still owe tax?
Potentially, yes. The reporting threshold only decides whether a form is issued. Any profit from selling goods or providing services is taxable income and must be reported regardless of whether you received a 1099-K.
Do payments from friends and family count?
No. Reimbursements, gifts, and shared expenses sent as personal (friends-and-family) transfers are not reportable. Problems usually arise only when a business payment is mislabeled as personal, or a personal one is tagged as goods and services — so choose the right category each time.
Bottom line
For 2025 and 2026, the payment-app reporting rule is back to where it was for years: over $20,000 and more than 200 transactions per platform before a federal 1099-K is required. That means most casual sellers and bill-splitters won’t get a form. But the tax itself hasn’t changed — if you earn money selling goods or services, report it and keep good records, form or no form. And if you’re in a lower-threshold state, watch that number closely.
WalletWisp is an informational resource, not financial or tax advice. For guidance on your specific situation, consult a qualified tax professional.
