What Triggered This Change?
On October 23, 2025, the IRS issued Fact Sheet 2025-08 explaining that the reporting threshold for Form 1099-K under the One, Big, Beautiful Bill (OBBB) now reverts to its pre-American Rescue Plan (ARPA) levels: payments must exceed $20,000 and there must be more than 200 transactions to require Form 1099-K reporting. (irs.gov) This change applies retroactively, aligning with long-standing thresholds many sellers already knew.
Who Is Impacted?
This shift most affects:
- Online marketplace sellers who receive payments via platforms (Etsy, Upwork, etc.), especially the full-time and sideline gig economy
- Digital content creators—streams, courses, art sales—often paid via third-party settlement organizations (TPSOs)
- Freelancers who accept payment apps as clients’ preferred method of payment
If you received payments over multiple platforms, combined gross amounts matter—both for whether TPSOs generate 1099-Ks and how income is taxed.
Breakdown: Old, New, and Future Thresholds
| Period | Threshold Criteria |
|---|---|
| Before OBBB (pre-July 4, 2025) | Over $20,000 and more than 200 transactions (irs.gov) |
| Under ARPA twilight | Attempted earlier lower thresholds (e.g. $600) but later delays and relief applied (irs.gov) |
| 2025-2026 | Reverted to $20,000 & 200 transactions (irs.gov) |
| 2026 onwards (statutory) | $600 regardless of transaction count—as required by law after phase-in (irs.gov) |
Practical Compliance Tips
- Monitor cumulative earnings across platforms: Even if each platform pays under $20,000, combined amounts could trigger reporting in 2026.
- Maintain transaction records: Keep full counts—dates, amounts, payment method—because both amount and number matter.
- Watch for 2026 changes: The statutory threshold drops to $600 regardless of number of transactions—so plan ahead.
- Tax withholding and backup withholding: Note that penalties may apply for TPSOs failing to withhold in certain years—stay compliant with Notice 2024-85 and related IRS guidance. (irs.gov)
- Include income whether or not you get a 1099-K: The IRS mandates reporting all income—even if you don’t receive form. Missing forms don’t excuse omissions.
Example Situations
- Case A: Alex sells handmade goods on two platforms. In 2024, she gets $11,000 from Etsy and $10,000 from Shopify with over 250 transactions total. No 1099-K issued in 2024 because threshold was $5,000 & both amount & transactions matter. (irs.gov) In 2025, with the reverted threshold, it also drops back. But in 2026, $600 threshold means expect forms from platforms under that limit.
- Case B: Brooke streams digital art and receives direct payments via PayPal and credit cards—regardless of platform threshold, income must be reported on Schedule C. Form 1099-K may or may not show—but doesn’t change reporting responsibility.
Why This Matters for Taxpayers
This reversion reduces reporting burden for many sellers and TPSOs in the near-term. However, for 2026 and beyond, with dramatically lowered limits, informal economy participants and side hustlers will need to prepare for far-increased scrutiny. Being caught unaware could lead to missed filings, overlooking deductions, or misreporting income.
Stay on top of communications from your payment platforms, and consult a tax professional if you’re unsure how the evolving rules apply to your income sources—especially in international or cross-border contexts.