Tax Planning
Tax Planning for Gig Workers: Navigating Form 1099-K Changes Under the One, Big, Beautiful Bill
The One, Big, Beautiful Bill has changed the reporting thresholds for third-party payment platforms. Learn how these changes affect gig workers and what steps you can take now to stay compliant.
By NomadicTax Research Team • 5-8 min read • November 16, 2025
## What’s New with Form 1099-K Thresholds
- The One, Big, Beautiful Bill (OBBB), signed July 4, 2025, **reinstated** the 1099-K threshold to **$20,000** *and* **200 transactions** for payments received through third-party settlement organizations. This means that if you receive money via PayPal, Venmo, Etsy, etc., you’ll only get a Form 1099-K if both the total payments exceed $20,000 *and* count more than 200 transactions a year. ([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))
- The previous plan—mandated by ARPA—to lower it to $600 starting in 2026 has been overridden. ([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))
## Why This Matters for Gig Workers
- Many gig workers and casual sellers expected to start receiving 1099-K forms under the old $5,000 or $2,500 thresholds. Now, with the restored $20,000/200 rule, fewer reports will be generated. ([avalara.com](https://www.avalara.com/blog/en/north-america/2025/07/one-big-beautiful-bill-act-1099-reporting-threshold.html?utm_source=openai))
- However, **all income is still taxable**, whether or not you receive a 1099-K. This means tracking income from platforms even below thresholds is essential. ([avalara.com](https://www.avalara.com/blog/en/north-america/2025/07/one-big-beautiful-bill-act-1099-reporting-threshold.html?utm_source=openai))
## Actionable Steps for Compliance and Planning
1. **Track all income**: Use accounting software or spreadsheets to log every transaction—platform-based or not—along with the purpose and related expenses. Even if below reporting thresholds, you still report business income.
2. **Review monthly transactions**: If you’re near either threshold (e.g. $15,000 or 150 transactions), monitor closely—in case you cross both thresholds and trigger a 1099-K.
3. **Document well**: For platforms where personal or gifts are involved, keep clear documentation showing those are not business transactions.
4. **Adjust quarterly estimates**: Less income reported via 1099-K might mean smaller automatic withholding; adjust your estimated tax payments accordingly to avoid underpayment penalties.
5. **Plan before 2026**: OBBB also changes thresholds for Forms 1099-MISC and 1099-NEC, raising them to **$2,000** starting in tax year 2026. ([avalara.com](https://www.avalara.com/blog/en/north-america/2025/07/one-big-beautiful-bill-act-1099-reporting-threshold.html?utm_source=openai))
## Example Scenarios
- **Side-hustler scenario**: Jane sells handmade crafts via online marketplaces. In 2025, she makes **$12,000** across 250 transactions. Both thresholds must be met to trigger Form 1099-K. She meets the transactions requirement (250) but not the dollar amount ($12,000 < $20,000), so **no Form 1099-K** will be issued. But Jane still reports $12,000 on Schedule C and deducts crafting expenses.
- **Freelancer scenario**: Bob does consulting via a third-party network, earning **$25,000** through only **150 transactions**. He exceeds the dollars threshold but not the transaction count, so **no 1099-K** under the restored rule. Again, taxable income must be reported personally.
## Key Takeaways
- Meeting **both** dollar *and* transaction thresholds is now required for 1099-K reporting.
- The $20,000/200 threshold applies **retroactively** as if ARPA’s lowered threshold never took effect. ([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))
- For 1099-MISC and 1099-NEC, starting in **tax year 2026**, thresholds increase to **$2,000**, adjusted for inflation in subsequent years. ([avalara.com](https://www.avalara.com/blog/en/north-america/2025/07/one-big-beautiful-bill-act-1099-reporting-threshold.html?utm_source=openai))
**Bottom line**: if you're earning income through gig work or online sales, know where you stand with thresholds—but always keep accurate books. Even where reporting thresholds don’t force platforms to send forms, your tax return must reflect your real income.