The 1099-K Threshold for 2025 and 2026: The $20,000 Rule Is Back
After years of confusion, the Form 1099-K threshold is settled again. For 2025 and beyond, a payment app or marketplace only has to send you a 1099-K if your payments for goods and services exceed $20,000 and more than 200 transactions. The One Big Beautiful Bill Act repealed the looming $600 rule and restored the old threshold. Here's the full story — and the one thing that hasn't changed.
What a 1099-K actually is
Form 1099-K reports payments you received for goods or services through a third-party platform — PayPal, Venmo, Cash App, Etsy, eBay, Stripe, and the like — or through payment cards. It's an information return: the platform sends a copy to you and to the IRS. It does not change what you owe; it just reports what flowed through the platform.
The threshold, year by year
The number has whipsawed, which is why there's so much confusion:
| Tax year | 1099-K reporting threshold |
|---|---|
| 2023 & earlier | Over $20,000 and more than 200 transactions |
| 2024 | Over $5,000 (no transaction minimum) |
| 2025 and later | Over $20,000 and more than 200 transactions (restored) |
The American Rescue Plan had lowered the threshold to a flat $600, and the IRS planned to phase it in ($2,500 for 2025, $600 for 2026). Those lower thresholds were repealed by OBBBA before they took full effect — so the $600 rule you may have heard about never actually applies.
The one thing that didn't change: your income is still taxable. Whether or not a 1099-K lands in your mailbox, money you earn selling goods or providing services must be reported on your return. A higher form-reporting threshold doesn't lower your tax — it just means fewer forms.
Selling or freelancing on the side?
Estimate the self-employment tax on that income before it surprises you at filing.
Four caveats that still catch people
- Payment cards have no minimum. If you accept credit or debit cards through a processor, those are reported on a 1099-K regardless of amount — the $20,000/200 threshold applies only to third-party network (app/marketplace) payments.
- States may set lower thresholds. Several states require 1099-K reporting below the federal level, so you may receive one even if the IRS wouldn't require it.
- Platforms can issue one voluntarily. Some apps send a 1099-K below the threshold to be safe. Getting one doesn't automatically mean the income is taxable — but you do need to account for it.
- Personal payments aren't income. Splitting rent, repaying a friend, or receiving a gift through an app shouldn't be reported as business income. Use the personal/friends-and-family setting so those aren't miscoded as goods-and-services.
The 1099-NEC and 1099-MISC threshold also moved
Separately, OBBBA raised the reporting threshold for Form 1099-NEC and Form 1099-MISC — used for contractor and other nonemployee payments — from $600 to $2,000, starting with the 2026 tax year (indexed for inflation after that). So a business paying a freelancer $1,500 in 2026 won't need to issue a 1099-NEC, though the freelancer still owes tax on it.
What to do
- Track income regardless of forms. Keep your own records of sales and earnings — your reporting obligation doesn't depend on a 1099-K.
- Separate personal and business activity on payment apps, and keep documentation of expenses to offset reported gross amounts.
- Reconcile any 1099-K you receive against your records; report business income on Schedule C and personal-item sales appropriately.
Frequently Asked Questions
What is the 1099-K threshold for 2025 and 2026?
Over $20,000 and more than 200 transactions for goods-and-services payments through a third-party platform. OBBBA reversed the planned $600 threshold.
Do I owe tax if I don't get a 1099-K?
Yes — income is taxable whether or not you receive the form. The 1099-K is a report, not the trigger for the tax.
Did the $600 rule go away?
Yes. It never fully took effect and was repealed by OBBBA, which restored the $20,000/200 threshold for 2025 and beyond.
What's the 1099-NEC threshold for 2026?
It rises from $600 to $2,000 for the 2026 tax year, then indexes for inflation.
For tax professionals: the restored threshold comes from OBBBA §70432 (retroactive to 2022) and the IRS's revised FAQs in Fact Sheet 2025-08; the 1099-NEC/MISC change is OBBBA §70433. Confirm current state thresholds and the latest IRS instructions when advising clients.