Dec 15, 2025
Online sellers and freelancers in the U.S. have found changes to the 1099-K reporting threshold headache-inducing at best over the past couple of years, but a recent change in IRS policy will come as a relief to many.
Congress enacted a rule to change the 1099-K threshold for your 2025 taxes, meaning you should only receive a Form 1099-K if you receive more than $20,000 in gross payments on third-party networks or payment apps and you also conduct more than 200 transactions on a single platform within the tax year (1).
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This is good news for those who have a side hustle like driving Uber or casually selling items online. The threshold should ensure that only those who are seriously engaged in selling goods or services through a third-party platform are responsible for the extra tax paperwork, and are likewise taxed appropriately on their profit.
Here’s the backstory on the Form 1099-K confusion, and why you can now rest easy if you’re looking to make some casual money on the side — without having to worry about extra tax forms.
Changes to the 1099-K rules
Initially, the “$600 rule” statute that changed the requirements for 1099-K forms meant that all taxpayers who earned $600 or more on platforms like PayPal, Venmo or Cash App would have to complete the additional form and be taxed on that income. However, in an effort to soften the impact on both these third-party companies and on taxpayers, the IRS announced a $5,000 threshold for 2024 taxes — a way to “phase in” the implementation of the $600 threshold (2).
This caused confusion for many over the past few tax seasons, and many taxpayers received 1099-K forms they weren’t expecting.
The National Taxpayers Union Foundation (NTUF) lobbied hard against the changes, arguing that a drastic drop in the reporting threshold would cause the resulting confusion about forms and reporting, and could also trigger taxes for things like receiving money transfers from friends, with taxpayers having to report higher incomes than they really earned.
“The 1099-K course correction is a big win for transparency, simplicity and common sense,” wrote Demian Brady, vice-president of research at NTUF (3).
What is a Form 1099-K?
This IRS tax form reports payments received through third-party networks or payment apps. In practice, it helps the IRS to track income you earn from running a business, including online sales and gig work.
Business owners who accept credit card, debit card, gift card or other electronic payments from customers need 1099-K forms to accurately report their business income (4). However, casual sellers, including those selling personal items through online marketplaces, should not receive a 1099-K form from the third-party payments platform they use.
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Why the change was a blow to Americans — and why the reversal is a win
Form 1099-K was originally issued in 2011. Until the American Rescue Plan Act of 2021 reduced the threshold and eliminated the number of transactions requirement, the limit stood at $20,000 in income and 200 transactions on at least one platform (5). The One Big Beautiful Bill Act reversed the changes from the 2021 act, which many experts have called a return to common sense.
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The revision in the tax law offers some relief for Americans who are looking for ways to earn extra income through occasional gig work or selling personal items online for cash.
If you have a thriving online business, you’re likely already familiar with 1099-K forms and know the threshold you have to exceed before you’re required to complete the form. The platforms you use should issue the 1099-K forms for the 2025 tax by Jan. 31, 2026.
If you’re a casual seller, remember that even though you don’t have to fill out a 1099-K form, income is income and you should report it. Income you make through selling online is added to your regular income for the year.
If you make less than the $20,000 minimum through online sales and have no other forms of income, you won’t have to complete a 1099-K form, but you should file taxes anyway, as you may be eligible for a tax refund due to your low income status (5).
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
IRS (1); Kiplinger (2); National Taxpayers Union Foundation (3); TurboTax (4); (5)
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Rebecca Holland is dedicated to creating clear, accessible advice for readers navigating the complexities of money management, investing and financial planning. Her work has been featured in respected publications including the Financial Post, The Globe & Mail, and the Edmonton Journal.
