Compliance
Effective 2026 U.S. Changes: IRS Inflation Adjustments and 1099-K Threshold Explained
Major U.S. tax changes for 2026—standard deductions rising, marginal rates shifting, and big updates to 1099-K thresholds—can impact freelancers, small businesses, and gig economy earners.
By NomadicTax Research Team • 5-8 min read • November 15, 2025
## Overview of Key IRS Changes for Tax Year 2026
The IRS recently announced several inflation-driven adjustments under the *One, Big, Beautiful Bill* (OBBB) that will significantly affect taxpayers for the 2026 filing year. Two of the most impactful changes are the increase in the standard deduction and the restoration of 1099-K filing thresholds. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
Here are some of the most important updates:
| Item | Previous (2025) | New for Tax Year 2026 |
|---|---|---|
| Standard Deduction (Married Filing Jointly) | $31,500 | $32,200 ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai)) |
| Standard Deduction (Single) | $15,750 | $16,100 ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai)) |
| Earned Income Tax Credit Max (3+ Children) | $8,046 | $8,231 ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai)) |
| Foreign Earned Income Exclusion | $130,000 | $132,900 ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai)) |
## 1099-K Threshold Reversion: What’s Changing
Under the new OBBB law, the IRS restored the 1099-K reporting threshold back to **$20,000** *and* at least **200 transactions**, for third-party settlement organizations (TPSOs) to be required to file 1099-K forms. This undoes the lower thresholds in place after the American Rescue Plan Act of 2021. ([irs.gov](https://www.irs.gov/newsroom/irs-issues-faqs-on-form-1099-k-threshold-under-the-one-big-beautiful-bill-dollar-limit-reverts-to-20000?utm_source=openai))
### Who this affects:
- Gig workers selling goods or services via online marketplaces or payment apps.
- People with many small transactions—think of rideshare drivers or artisans.
- Tax preparers—and both small business owners and hobbyists who receive income through payment platforms.
## Actionable Insights: What You Should Do Now
**1. Revisit your estimated tax and withholding strategy.**
With standard deductions increasing, you may owe less in federal tax. If you’ve been under-withholding, this could help reduce the gap. Conversely, income brackets have shifted too—so make sure you're plugged into updated tables.
**2. Keep thorough records of all payments.**
Even with a higher threshold for 1099-K reporting, every dollar counts. Document every sale, platform fees, and cost of goods so that you're prepared even if you don’t receive a 1099-K.
**3. Review eligibility for credits.**
Earned Income Tax Credit and adoption credit limits have shifted. If you or dependents qualify, investigate whether you can benefit more in 2026 than in previous years.
**4. Leverage professional help early.**
If you're in the gig economy, freelancing, or having mixed sources of income, a tax professional can help you optimize deductions and avoid surprises.
**5. Factoring in timing.**
These changes apply for returns filed in 2027, covering income earned in 2026. Assess financial decisions—like selling assets or timing income—to align with the new rules.
## Practical Example
*Jane* sells homemade crafts online through a marketplace. In 2025, she exceeded **200 transactions** but total sales were only $19,000, so she did **not** receive a 1099-K. Under the new rule, she still won’t. But when she sells $21,000 with over 200 transactions in 2026, the platform will issue a 1099-K. If she simply tracks her business income and expenses carefully now, she avoids surprises come tax time.
## Final Takeaways
- **Standard deductions**, **income brackets**, and **credits** will have larger thresholds due to inflation—many households will see modest relief.
- The **1099-K reporting threshold** reversion primarily helps small sellers and gig workers avoid excess paperwork—but all income is still taxable regardless.
- Start planning now—use updated tables, set up strong recordkeeping practices, and adjust withholding or estimated payments if needed.
These changes demonstrate how inflation adjustments and legal reforms like OBBB continue to shape the tax landscape. Stay informed, stay ready.