Another IRS 1099-K Threshold Change to Know for Your 2025 Taxes
After years of uncertainty and changing requirements, the 1099-K reporting rules for 2025 are now set, and the thresholds have changed since last year.
If you earn money through a side hustle, run a small business, or get paid through apps like Venmo, PayPal, or Cash App, or sites like eBay, you’ve probably come across a lot of mixed messages about the 1099-K form.
You’re not alone. Over the past couple of tax seasons, many online sellers and freelancers have shared that same uncertainty.
Much of the confusion stemmed from IRS back-and-forth on the 1099-K reporting threshold. That included changed policies and postponed deadlines for implementing an initial “$600 rule,” which left sellers and payment platforms in limbo.
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But there’s some good news: Congress recently enacted a rule change designed to simplify things this year.
- Essentially, this latest approach returns to a more familiar and less burdensome framework.
- That shift should alleviate some of the stress for many individuals and businesses confused by more recent tax reporting requirements.
Here’s what you need to know about the latest change to 1099-K rules for your 2025 taxes, starting with a look at what the 1009K is.
What Is a 1099-K?
A 1099-K is an IRS tax form that reports payments you received through third-party networks or payment apps. Think of it as a way for the IRS to track income earned from business activities, like online sales or gig work, that is processed through platforms like PayPal, Venmo, or Cash App.
Over the past couple of tax seasons, there has been considerable confusion about when these forms were issued due to adjustments to IRS rules.
- Due to a pandemic-era law, the reporting threshold for Form 1099-K was initially supposed to drop to just $600, meaning payment platforms would have sent millions of tax forms to people with even small amounts of business or casual sales income.
- Since then, thresholds for reporting shifted multiple times, causing many people to receive unexpected 1099-K forms.
- For example, last year, the IRS announced a $5,000 threshold for 2024 taxes as part of a phase-in to implement the $600 reporting threshold.
Although the tax agency was attempting to implement the thresholds in stages, the back-and-forth made tax filing stressful and unclear for many sellers and some payment platforms.
1099-K threshold: What’s new for 2025?
As of July 4, 2025, the Trump/GOP tax and spending bill, referred to by some as the “big beautiful bill” (BBB), became law. The megabill brings several tax changes.
One that will likely have many cheering is a return to the earlier, higher thresholds for 1099-K reporting from payment apps like (but not limited to) PayPal, Venmo, Cash App, Etsy, StubHub, eBay and Airbnb.
So, for payments you receive for 2025 (sent to you in early 2026), you should only receive a Form 1099-K if:
- You receive more than $20,000 in gross payments and
- You conduct more than 200 transactions on a single platform within a year.
For most people paid via these third-party processing platforms — from part-time sellers to casual gig workers — this means no more unexpected tax paperwork just for the occasional online sale or side job.
Reinstating the 200/20,000 rule should reduce the paperwork burden on smaller sellers and gig workers while maintaining IRS oversight of higher-volume payment activity. It will eventually help lessen uncertainty.
What to do If you receive a 1099-K
If you get a 1099-K form in the mail, it means the IRS has a record of payments made to you through a third-party platform. Receiving the form doesn’t automatically mean you owe taxes on the full amount shown, though. It's just a report of gross payments received.
You still need to accurately track your expenses and income to determine your taxable profit.
Here are a few more key tips to keep in mind:
Keep thorough records: Save receipts, invoices, and transaction statements related to your sales or services. This documentation is essential for deducting business expenses and verifying your income.
Report all income: Report all your taxable income, whether you receive a 1099-K or not.
Match your records to the 1099-K: Use the form as a helpful cross-check, but don’t assume it’s error-free. Payment platforms sometimes report gross payments without subtracting fees, refunds, or chargebacks.
Consult a tax professional if needed: If your situation is complex or you’re unsure how to handle the form, a tax advisor can help you navigate tax deductions and credits, reporting, and compliance.
Being proactive and organized throughout the year can make tax time less stressful and help you avoid surprises if you do receive a Form 1099-K.
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