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Millions of Americans who sell goods online or use third-party payment apps such as PayPal, Venmo, Cash App, or Etsy will see new 1099-K reporting rules starting in 2025. The One Big Beautiful Bill Act, signed by President Donald Trump on July 4, rolls back the lower reporting thresholds previously planned by the IRS. An important exception is Zelle, which is not subject to 1099-K reporting because it transfers money directly between bank accounts.
New IRS 1099-K Thresholds
Before the new law, the IRS was set to lower the threshold to just $600 beginning in 2026. That plan has now been reversed. Starting in 2025, the threshold reverts to $20,000 in payments and 200 transactions per year. For 2024 only, a temporary $5,000 limit will apply.
| Tax Year | Previous Law | Current Law |
|---|---|---|
| 2023 and earlier | $20,000+ and 200+ transactions | $20,000+ and 200+ transactions |
| 2024 | $5,000+ | $5,000+ |
| 2025 | $2,500+ | $20,000+ and 200+ transactions |
| 2026 and beyond | $600+ | $20,000+ and 200+ transactions |
Who Will Receive a 1099-K?
Form 1099-K is sent to taxpayers who receive payments for selling goods or services through third-party platforms. Even if you don’t meet the threshold, you must still report all taxable income on your return. Personal payments such as gifts, reimbursements, or shared expenses are not taxable and should not appear on a 1099-K.
Here’s How to Report 1099-K Income
How you report depends on the type of payment:
- Personal sales: Profit is taxable, but losses are not deductible.
- Business or gig work: Report on Schedule C.
- Rental income: Report on Schedule E.
Bottom Line
The One Big Beautiful Bill Act restores the $20,000 and 200-transaction threshold for 1099-K reporting starting with the 2025 tax year. This change eases the reporting burden for casual sellers and small business owners using PayPal, Venmo, Cash App, or similar platforms, while Zelle remains exempt.
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