Tax Planning
US IRS Inflation-Adjustments & Reporting Changes under the One, Big, Beautiful Bill
Recent IRS guidance in October 2025 outlines inflation adjustments for tax year 2026, changes to Form 1099-K thresholds, and expanded reporting of car loan interest—all critical for US businesses and individuals.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## What the “One, Big, Beautiful Bill” Means in Practice
- **Inflation adjustments** for tax year 2026: The IRS announced updates to more than 60 tax provisions—including tax rate schedules, standard deductions, and income thresholds—reflecting inflation impacts. These updates are detailed in Revenue Procedure 2025-32. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
- **Form 1099-K threshold reverts to $20,000**: The threshold for reporting payments via third party settlement organizations under OBBB returns to $20,000. New FAQs clarify which transactions must be reported. This is critical for online sellers or gig platform workers. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
- **Car loan interest reporting**: Starting 2025, certain lenders will need to report car loan interest. The IRS is providing transitional guidance and penalty relief via Notice 2025-57 to ease into the requirement. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-october-2025?utm_source=openai))
## Who Needs to Know These Changes
- Individuals and businesses whose incomes hover near or above inflation-adjusted tax brackets.
- E-commerce sellers using platforms like Amazon or Etsy (Form 1099-K reporting beneficiaries).
- Lenders, financing firms, auto dealerships who collect or pay car interest.
## Practical Implications & Action Steps
1. Adjust your **withholding** and estimated payments in anticipation of higher brackets or phase-outs.
2. If you receive 1099-K or run marketplaces, review thresholds and ensure transactions are properly documented. Some previously unreported income may now be reportable.
3. For lenders handling car loan interest: audit your reporting systems now; under the transitional guidance, certain penalties may be waived if compliance is met in good faith.
4. Consult tax software providers to ensure they are updated for Revenue Procedure 2025-32 so your filings are accurate.
## Case Example
- **Marketplace seller**: Earns $19,000 via platform in 2025; threshold drops in 2026 to $20,000 meaning they might not need a 1099-K—but rising thresholds mean many sellers who thought they were safe now may need to report.
- **Auto finance company**: Must adapt reporting for interest charged on leases or loans beginning 2025 to align with new OBBB rules; stay updated on IRS FAQs.
## Compliance Notes
- The IRS is issuing **FAQs** and **transition relief**, but only for some provisions—some entities may still face penalties if ignoring changes.
- Deadlines like PTIN renewals for preparers and timely extensions matter more under increased scrutiny.
**Bottom line**: With these updates under the One, Big, Beautiful Bill, both individuals and businesses need to review their income levels, sales platforms, and reporting systems to stay compliant and avoid surprises in 2026 filings.