The $600 1099-K Rule Is Dead: Your 2026 Guide for Sellers

Last December, Priya in Columbus set aside a few hundred dollars for a tax bill she was certain was coming. She'd cleared about $9,400 flipping sneakers on eBay during 2025, and every article she'd read said the same thing: starting soon, any app that paid you more than $600 would report it straight to the IRS. So she braced for the form. Then she filed her return in early 2026, and the form never showed up.

Her first thought was relief. Her second thought, the dangerous one, was that maybe she didn't have to report the $9,400 at all.

She was right about the form and wrong about the money. The $600 rule that millions of casual sellers dreaded got repealed in the summer of 2025. But "no form arrived" and "I owe nothing" are two completely different statements, and the gap between them is where people get into trouble.

If you sell on eBay, resell sneakers, take payments through Venmo for goods, drive for a rideshare app, or run any kind of side income through a payment platform, this is the rule that changed under you. Here's what's actually true now.

What Congress actually changed in July 2025

When President Trump signed the One Big Beautiful Bill Act on July 4, 2025, one of its quieter provisions reset the Form 1099-K reporting threshold all the way back to where it sat before 2021.

A payment platform now has to send you (and the IRS) a 1099-K only if you cleared more than $20,000 in gross payments AND had more than 200 transactions in the year. Both conditions have to be met. Hit one but not the other, and no form is required at the federal level.

The IRS confirmed the change in a news release on October 23, 2025 (IR-2025-107), pointing to the detailed FAQs in Fact Sheet 2025-08. The reinstatement is retroactive, which matters: it applies to tax years going back to 2022, so it already covered the forms that went out for the 2025 tax year this past filing season. That's why Priya's form never came. At $9,400 across a few dozen sales, she was nowhere near $20,000 and 200 transactions.

For the millions of Americans who run money through payment apps and online marketplaces, that's a real reduction in paperwork. It does not change what they owe.

The rule everyone feared, and why it kept moving

To understand why so many sellers were on edge, it helps to know how chaotic the last four years were.

The American Rescue Plan Act of 2021 slashed the 1099-K threshold to a flat $600 with no minimum number of transactions. Sell one used couch on Facebook Marketplace for $700, and a form was supposed to follow. The IRS projected the change would push out something like 44 million of these forms a year, a flood of paper aimed at people who'd never seen a 1099-K in their lives.

It was so unworkable that the IRS kept postponing it. The agency announced transition relief that set the threshold at $5,000 for 2024, then $2,500 for 2025, with the full $600 rule finally landing in 2026. Sellers got three straight years of "it's coming next year" headlines. Then it didn't come at all. The 2025 law wiped out the $5,000, $2,500, and $600 steps and put the old $20,000-and-200 standard back as if the detour had never happened.

So if you spent the past couple of years dreading a $600 form, your instinct was reasonable. The rule was real, it was scheduled, and then it was killed at the last minute. The whiplash is the whole story.

The part that didn't change, and where people slip

Here's the sentence to tape to your monitor: the threshold decides whether you get a form, not whether the income is taxable.

A 1099-K is an information return. It's the IRS's receipt copy, not the rule about what you owe. The tax code says income from selling goods and services is taxable whether or not a platform sends paperwork. Raising the reporting bar back to $20,000 didn't carve out a tax exemption for everyone underneath it. It just means the IRS won't automatically receive a copy of your totals.

This is exactly the trap Priya nearly walked into. She buys sneakers to resell them at a markup. That's a business activity, which means her profit belongs on a Schedule C and is subject to self-employment tax, form or no form. Skipping it because the envelope never arrived would have been underreporting income, not clever tax planning.

The honest framing is this. If you're running a side hustle for profit, track your income and your costs and report the net. If you're a casual seller cleaning out the garage, you probably owe nothing (more on that below), but the reason is that you sold personal stuff at a loss, not that a form failed to show up.

Where you might still get a form below $20,000

The federal threshold is the headline, but it isn't the only one that can trigger a form.

Several states set their own, much lower 1099-K thresholds and didn't budge when the federal number went back up. Maryland, Massachusetts, Vermont, and Virginia, for example, require a 1099-K once you clear just $600 in a year, regardless of how many transactions you had. A handful of other states sit somewhere between the state floor and the federal ceiling. So a seller in Boston and a seller in Phoenix can run identical numbers and only one of them gets a form.

Platforms can also choose to send a 1099-K even when they aren't required to. Some report at lower internal thresholds to stay on the safe side, and if you ever ignored a request to verify your taxpayer ID, backup withholding rules can pull you into reporting too. The takeaway is simple: getting a form below $20,000 doesn't mean someone made a mistake, and not getting one above $0 doesn't mean you're off the hook.

The other 1099 change worth one minute

While everyone watched the 1099-K, the same 2025 law quietly nudged a different form that hits freelancers more directly.

The 1099-NEC, which a business sends when it pays a contractor, had been stuck at a $600 reporting threshold for years. Starting with payments made in 2026, that jumps to $2,000, and after 2026 it gets indexed to inflation. The related 1099-MISC threshold moves the same way.

If you do freelance or contract work, this means a client who pays you, say, $1,500 across the year in 2026 no longer has to file a 1099-NEC for it. And by now you know the punchline: you still report that $1,500. The form went away. The income didn't.

What to do if a form shows up for stuff you sold at a loss

Plenty of people will still receive a 1099-K for selling personal belongings, especially in the $600-threshold states. If that's you, and you sold used items for less than you originally paid, you don't owe tax on them. You also can't deduct the loss, because personal-use property doesn't work that way. What you can do is make sure the form doesn't get counted as taxable income.

The IRS spells out the mechanics in its "What to do with Form 1099-K" guidance. You report the amount from the form on Schedule 1 of your 1040 (Part I, line 8z), then enter the same amount as an offsetting adjustment (Part II, line 24z), so the two cancel out and nothing flows through as income. Keep a quick record showing the items were personal and sold at a loss, in case anyone ever asks.

Two situations are different. If you sold a personal item for more than you paid, like a watch or a collectible that appreciated, that gain is taxable and goes on Schedule D. And if you're selling for profit as a business, none of this loss-offset stuff applies. You report revenue and expenses on Schedule C.

One reassurance for the worriers: money your friends send you on Venmo or Zelle for splitting rent, covering dinner, or repaying a loan is not reportable as a 1099-K. Those are personal transfers, not payments for goods or services. The forms only track the goods-and-services side.

Bottom Line

The $600 form is gone, the paperwork got lighter, and the rules about what you owe stayed exactly the same. Here's how to get on the right side of it this week:

1. Separate "form" from "owed" in your head. If you earn money selling goods or services, plan to report the profit, even if no 1099-K ever lands in your inbox. The threshold change is about IRS paperwork, not a tax break.

2. Check your state's threshold. If you're in Maryland, Massachusetts, Vermont, Virginia, or another low-threshold state, you may still get a 1099-K after clearing just $600. Search "[your state] 1099-K threshold" so a form in January doesn't catch you off guard.

3. Start a simple income-and-cost log now, not in April. A spreadsheet with what you sold, what you received, and what it cost you turns tax time from guesswork into ten minutes of math, and it's the difference between reporting profit and overpaying on gross sales.

4. If you only sold personal stuff at a loss, know the offset. Should a 1099-K arrive anyway, report it on Schedule 1 line 8z and back it out on line 24z so you're not taxed on a garage cleanout. Keep a note showing the items were personal.