If you’ve been stressing about getting a 1099-K from Venmo for that $700 you made selling old furniture on Facebook Marketplace, I have good news: it’s not happening.

On July 4, 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), and buried in its 1,200 pages was a legislative U-turn that changes everything about 1099-K reporting. The $600 threshold everyone was panicking about? Gone. The IRS’s phased rollout plan? Scrapped. We’re back to the original 2011 rules: $20,000 in payments AND more than 200 transactions before PayPal, Venmo, or any payment app has to send you—or the IRS—a 1099-K.

This isn’t a delay. This isn’t another “maybe next year” from the IRS. This is permanent federal law, retroactive to 2022, and it fundamentally changes who gets tax forms from payment platforms.

Here’s what actually happened, what it means for your 2026 taxes, and why this might be the biggest tax policy reversal in a decade.

The $600 Rule That Never Was (And Why It Finally Died)

Let’s rewind. In March 2021, the American Rescue Plan Act (ARPA) changed Form 1099-K reporting from a $20,000 threshold down to $600—with no transaction minimum. The logic was simple: close the “tax gap” by making sure the IRS knew about all business income flowing through third-party payment apps like Venmo, PayPal, Cash App, and online marketplaces like Etsy and eBay.

The problem? Nobody was ready.

Payment platforms couldn’t distinguish between personal transactions (splitting dinner with friends) and business income (getting paid for freelance work). The IRS couldn’t handle the volume—experts estimated the $600 threshold would generate 30 million additional 1099-K forms annually. And casual sellers—people offloading their used couch or hosting a garage sale—were suddenly getting tax forms for transactions that weren’t even taxable.

So the IRS delayed. And delayed again. Here’s how it played out:

The Failed Rollout Timeline:

• 2022: IRS delays $600 threshold, keeps $20,000/200 transactions in place
• 2023: Another delay. Still $20,000/200 transactions.
• 2024: IRS announces “phased approach”—lowers threshold to $5,000 (no transaction minimum)
• 2025: Plan was to drop to $2,500
• 2026: Final drop to $600 was scheduled

Then came July 4, 2025. The OBBBA didn’t just delay the $600 threshold—it repealed it entirely and retroactively restored the original $20,000 and 200-transaction rule as if the American Rescue Plan changes never happened.

According to the IRS’s updated FAQs (Fact Sheet FS-2025-08, published October 23, 2025), the $20,000/200-transaction threshold is now the law of the land for 2025 and beyond.

What This Means for Your 2026 Tax Return (Filed in 2027)

Here’s the bottom line: If you made less than $20,000 through payment apps in 2025, you almost certainly won’t get a 1099-K.

But—and this is critical—that doesn’t mean you’re off the hook for taxes.

The Rule Everyone Gets Wrong

Not receiving a 1099-K doesn’t mean your income isn’t taxable. If you earned $5,000 freelancing in 2025 and got paid through PayPal, you still owe taxes on that $5,000—even if PayPal doesn’t send you (or the IRS) a Form 1099-K.

Think of the 1099-K as a report card, not a tax bill. It’s a way for the IRS to cross-check what you report. But whether or not you get one, all income is taxable unless it falls under a specific exemption (gifts, personal item sales at a loss, reimbursements).

The Two Thresholds You Need to Hit (Both, Not Either)

For tax year 2025 (filed in 2026), payment platforms must issue a Form 1099-K only if BOTH of these are true:

1. More than $20,000 in gross payments, AND
2. More than 200 transactions

Miss either threshold? No 1099-K.

Examples:

• $25,000 in payments, 150 transactions → No 1099-K (didn’t hit 200 transactions)
• $15,000 in payments, 250 transactions → No 1099-K (didn’t hit $20,000)
• $22,000 in payments, 210 transactions → Yes, you get a 1099-K

This is why Etsy power sellers, full-time eBay resellers, and high-volume gig workers will still get forms—but the person who sold $3,000 worth of baby clothes on Facebook Marketplace won’t.

Who This Actually Affects (And Who Gets Relief)

The OBBBA’s 1099-K changes offer massive relief to three groups:

1. Casual Sellers

If you sold your old iPhone for $800 on eBay or had a yard sale and accepted Venmo payments, you’re no longer in the IRS’s crosshairs. Under the $600 rule, that sale would’ve triggered a 1099-K. Now? You’re exempt unless you’re running a business-level operation.

Important caveat: If you sold the iPhone for $800 but bought it for $1,200, that’s a personal loss—not taxable income. You’d need to keep receipts to prove basis if questioned, but you wouldn’t owe tax on a loss.

2. Side Hustlers and Gig Workers

Uber drivers, DoorDash deliverers, Upwork freelancers—most gig workers earn well under $20,000 annually from any single platform. A 2025 Censuswide survey found that 60% of gig workers didn’t even know the threshold had been lowered, and 20% were planning to quit gigs to stay under the (then-planned) $2,500 threshold.

With the $20,000 threshold back, gig workers can breathe easier. But remember: you still need to report this income on Schedule C, even without a 1099-K.

3. Small Business Owners Using Payment Apps

If you run a small consulting business and collect $8,000 a year through PayPal, you won’t get a 1099-K anymore. But you’re still self-employed, and that $8,000 is still subject to self-employment tax (15.3%) plus income tax.

The lack of a 1099-K just means the IRS won’t automatically know about it—which puts the burden of accurate reporting squarely on you.

The Platforms That Are (And Aren’t) Affected

Not all payment apps follow the same rules. Here’s what you need to know:

Subject to 1099-K Reporting (If You Hit Thresholds):

• PayPal (business transactions)
• Venmo (business profiles)
• Cash App (business accounts)
• Stripe
• Square
• Etsy (marketplace fees)
• eBay (seller fees)
• Airbnb (host payouts)
• StubHub (ticket sales)

NOT Subject to 1099-K Reporting:

• Zelle – This is the big one. Zelle directly transfers money between bank accounts and never holds funds, so it operates like a wire transfer. No 1099-K reporting, period.
• Direct bank transfers (ACH, wires)
• Personal checks
• Cash (obviously)

Pro tip: If you’re running a side business and want to avoid 1099-K reporting altogether, consider using Zelle or direct bank transfers. But don’t confuse “no 1099-K” with “no taxes owed”—you still report the income.

The Other 1099 Change Nobody’s Talking About

Buried in the same OBBBA legislation is another threshold change that affects freelancers and small businesses: 1099-NEC and 1099-MISC thresholds are jumping from $600 to $2,000 starting with tax year 2026 (filed in 2027).

Here’s what that means:

Form 1099-NEC (Nonemployee Compensation)

If you’re a freelancer and a client pays you directly (not through a platform), they’re required to send you a 1099-NEC if they paid you $600 or more in 2025. But starting in 2026, that threshold rises to $2,000.

Example: You did some graphic design work for a client in 2026 and they paid you $1,500 via check. They won’t send you a 1099-NEC. But you still owe taxes on that $1,500.

Form 1099-MISC (Miscellaneous Income)

Used for rent, royalties, prizes, awards, and other miscellaneous payments. Same deal: $600 threshold in 2025, $2,000 starting in 2026.

Critical detail: Both thresholds will be adjusted annually for inflation starting in 2027, so they’ll creep up each year.

Backup Withholding Changes Too

If you don’t provide a valid W-9 or taxpayer ID number, the payer is supposed to withhold 24% of your payment and send it to the IRS (called “backup withholding”). That rule now aligns with the $2,000 threshold—so backup withholding only kicks in if you’re being paid $2,000 or more starting in 2027.

What You Should Be Doing Right Now

The threshold changes are great news for administrative burden, but they don’t reduce your actual tax liability. Here’s your action plan:

1. Separate Personal and Business Transactions

If you use Venmo or PayPal for both personal and business transactions, create separate accounts or at least tag transactions correctly. Most platforms have “friends and family” options that won’t be reported to the IRS.

Why it matters: If you get a 1099-K that includes personal reimbursements (your roommate paying you back for groceries), you’ll have to explain to the IRS that it’s not taxable income. Save yourself the hassle.

2. Track Everything, Even Without a 1099-K

Just because you won’t get a 1099-K doesn’t mean you can skip reporting income. The IRS expects you to report all taxable income, regardless of whether you receive a tax form.

Best practice: Use accounting software like QuickBooks, FreshBooks, or even a simple spreadsheet. Log every payment, tag it as business or personal, and save receipts for business expenses.

3. Understand What’s Actually Taxable

Not everything on a 1099-K is taxable:

• Personal item sales at a loss: If you sold your used couch for $200 that you originally bought for $800, that’s not taxable. It’s a personal loss.
• Gifts and reimbursements: Money from friends/family or someone paying you back isn’t taxable income.
• Personal property sales at a gain: If you sold that couch for $1,000 (more than you paid), the $200 profit is technically taxable as a capital gain. In practice, most people don’t track basis on personal property, but if you’re selling high-value items (art, jewelry, collectibles), keep receipts.

4. Set Aside Money for Quarterly Estimated Taxes

If you’re self-employed and expect to owe more than $1,000 in taxes, you’re supposed to pay quarterly estimated taxes (due April 15, June 15, September 15, and January 15).

Rule of thumb: Set aside 25-30% of every payment you receive for taxes. That covers federal income tax, self-employment tax, and state income tax (if applicable).

Missing estimated tax payments can result in penalties, even if you pay your full tax bill by April 15.

5. Know Your State’s Rules

Here’s where it gets messy: some states have their own 1099-K reporting thresholds that are lower than the federal threshold.

States with lower thresholds (as of January 2026):

• Vermont: $600 threshold
• Massachusetts: $600 threshold
• Maryland: $600 threshold
• Illinois: $1,000 threshold
• Virginia: $600 threshold

If you live in one of these states, you might still get a 1099-K from payment platforms even if you don’t hit the $20,000 federal threshold. The platform is required to comply with the lower state threshold.

Pro tip: Check your state’s Department of Revenue website or ask your CPA. State tax compliance is a minefield.

The Bigger Picture: Why This Matters for the Gig Economy

The OBBBA’s 1099-K reversal is more than a paperwork reduction—it’s a signal about how Congress views the gig economy.

When ARPA passed in 2021, the $600 threshold was meant to “level the playing field” between W-2 employees (whose income is always reported) and gig workers (whose income often flew under the radar). The IRS estimated it could close $50 billion in the tax gap over a decade.

But the backlash was fierce. Small business owners, casual sellers, and gig workers argued the threshold was too low and would bury the IRS in paperwork while catching people who weren’t actually evading taxes—just trying to declutter their garage.

The fact that Congress not only delayed but fully repealed the $600 threshold suggests they’ve accepted that the administrative burden outweighs the compliance benefit. Translation: the IRS would rather focus on big-ticket tax evasion than chase down $800 in Facebook Marketplace sales.

That said, this doesn’t mean tax enforcement is going away. The IRS still has other tools:

• Bank account reporting: The IRS can still request bank records if they suspect unreported income.
• Third-party audits: If your Venmo transactions don’t match your reported income, the IRS can still audit you.
• AI matching algorithms: The IRS is investing heavily in machine learning to flag discrepancies between reported income and spending patterns (mortgage payments, car loans, etc.).

The bottom line? Don’t treat the lack of a 1099-K as a green light to skip reporting income.

Frequently Asked Questions

Will I get a 1099-K for my 2025 income?

Only if you exceeded $20,000 in gross payments and had more than 200 transactions on a single platform. If you hit both thresholds, you’ll receive your 1099-K by January 31, 2026.

What if I get a 1099-K that includes personal transactions?

Request a corrected 1099-K from the platform. If they won’t issue one, report the correct taxable amount on your tax return and attach a statement explaining the discrepancy. Keep records (receipts, screenshots) proving the transactions were personal.

Do I still need to file quarterly estimated taxes if I don’t get a 1099-K?

Yes. If you’re self-employed and expect to owe $1,000 or more in taxes, you must pay quarterly estimated taxes. The lack of a 1099-K doesn’t change your obligation to pay taxes on time.

What about 1099-NEC? Do I still get those?

For 2025 (filed in 2026), yes—if a client paid you $600 or more. Starting in 2026 (filed in 2027), the threshold rises to $2,000.

Can I avoid taxes by staying under the thresholds?

No. All income is taxable, regardless of whether you receive a 1099-K, 1099-NEC, or any other tax form. Not receiving a form doesn’t exempt you from reporting the income.

What happens if I don’t report income and don’t get a 1099-K?

The IRS can still catch unreported income through audits, bank account analysis, or third-party data matching. Penalties for underreporting income can include back taxes, interest, and a 20% accuracy-related penalty (or more for fraud).

Does Zelle ever send 1099-Ks?

No. Zelle operates as a direct bank-to-bank transfer and never holds funds, so it’s not subject to 1099-K reporting. However, if you use Zelle for business income, you still owe taxes on that income.

What if my state has a lower threshold than $20,000?

You might receive a state-specific 1099-K. Platforms are required to comply with state thresholds if they’re lower than the federal threshold. Check your state’s Department of Revenue for details.

The Bottom Line

The OBBBA’s reversal of the 1099-K threshold is a massive win for administrative simplicity. Millions of casual sellers, side hustlers, and small business owners will no longer receive tax forms for relatively modest amounts of income.

But don’t mistake “no 1099-K” for “no taxes owed.” The IRS still expects you to report all taxable income, and the penalties for underreporting are steep.

The smartest move? Treat the lack of a 1099-K as a convenience, not a loophole. Track your income, set aside money for taxes, and report everything accurately. The $20,000 threshold buys you breathing room—not a free pass.

And if you’re one of the freelancers, gig workers, or online sellers who will exceed the threshold? Consider it a nudge to get serious about accounting. Open a business checking account designed for freelancers, use accounting software, and work with a CPA if your income is substantial.

The rules have changed. Make sure your taxes don’t.

Key Takeaways

✅ The $600 1099-K threshold is dead. The $20,000/200-transaction rule is back permanently.
✅ Not getting a 1099-K ≠ no taxes owed. All income is taxable, forms or no forms.
✅ 1099-NEC and 1099-MISC thresholds rise to $2,000 in 2026.
✅ State thresholds may differ. Check if your state has a lower threshold than the federal rule.
✅ Zelle is exempt from 1099-K reporting, but Zelle income is still taxable.
✅ Track everything. Use accounting software and keep records even if you don’t get forms.

Disclaimer: This article provides general tax information and should not be construed as tax advice. Tax laws are complex and change frequently. Consult with a licensed CPA or tax attorney for guidance specific to your situation.