Four years of whiplash over a single tax form just ended with a permanent reversal. The $600 reporting threshold for Form 1099-K, the form that payment apps like PayPal, Venmo, and marketplaces like Etsy use to report your earnings to the IRS, is gone. Congress killed it.
The One Big Beautiful Bill Act, signed into law on July 4, 2025, permanently restored the original reporting threshold. Third-party settlement organizations, the technical term for payment apps and online marketplaces, now only need to issue a Form 1099-K when a seller receives more than $20,000 in gross payments and completes more than 200 transactions in a calendar year. Both conditions must be met.
What almost happened
The American Rescue Plan Act of 2021 slashed the 1099-K reporting trigger to just $600 with no transaction minimum. Had it taken effect, millions of small sellers, freelancers, and gig workers would have automatically had their income flagged to the IRS for amounts that barely cover a month of coffee. The IRS delayed the change four years running, but the lower threshold kept looming on the calendar.
The OBBBA did not just delay it again. Section 70432 of the law repealed the $600 threshold entirely and made the fix retroactive to 2022, wiping out the interim step-downs of $5,000 (2024) and $2,500 (2025) that the IRS had announced in late 2024.
What small businesses need to know now
The IRS confirmed the change in Fact Sheet 2025-08, published October 23, 2025. For tax year 2026 and beyond, the $20,000-and-200-transaction rule is the federal standard.
But there is a catch worth remembering. Not receiving a 1099-K does not mean the income is not taxable. The IRS still expects every dollar earned for goods and services to be reported on your tax return, whether or not a form shows up in the mail. Platforms can also voluntarily issue 1099-K forms below the federal threshold, and some states have their own lower reporting rules.
The law also raised the reporting threshold for Forms 1099-NEC and 1099-MISC from $600 to $2,000, effective for payments made in 2026, with inflation adjustments starting in 2027.
For now, the paperwork avalanche that small sellers feared is off the table. Whether future Congresses revisit the threshold remains an open question, but this change is written into law, not an IRS delay letter that expires next year.
