The Vice President of eBay Government Relations applauded lawmakers for restoring the original 1099K reporting threshold from $600 to $20,000. Cathy Foster said eBay has consistently advocated for a common-sense approach to the tax-related issue that impacted casual sellers.
“This 1099-K legislation provides clarity for millions of American entrepreneurs who rely on online platforms like eBay to build and grow their businesses,” Foster wrote in a post on LinkedIn this past week.
The creation of IRS Form 1099-K was the result of a law Congress passed in 2008 (which took effect in 2012) requiring payment processors like PayPal and credit card companies to report to the IRS whenever they processed payments for customers at the point they reached $20,000 and 200 transactions.
Congress later passed a law lowering the reporting threshold to $600 (no matter how many transactions) that took effect in 2022. That meant a taxpayer selling a single item for $600 or more would receive a 1099-K that tax year.
The IRS issued slight reprieves for tax year 2022 and 2023 and announced a phased in approach after that as follows:
- $5,000 in 2024
- $2,500 in 2025
- $600 in 2026 and after
Congress recently passed a law on July 4, 2025, raising the threshold back to its original $20,000 and 200 transactions. That’s a relief to many small sellers and casual sellers – and to marketplaces like eBay, whose administrative burden is now lifted significantly. The same is true for companies that employ gig workers.
States like Massachusetts and Vermont exploited the federal government 1099K by requiring companies to include them in the reporting mandate – except some states lowered the threshold to as low as $600 even before Congress – and as far as we know, those states aren’t changing their thresholds.
Keep in mind that 1099K thresholds apply only to the reporting mandate – sellers and gig-workers must still report all of their income on their income tax returns.
Tax guru Barbara Weltman wrote about this and other changes contained in the recently passed OBBB Act that impact small businesses, which you can read on her Big Ideas for Small Business website.