New 1099-K Rules under OBBB: What You Need to Know for 2025

When tax forms start arriving in early 2026, many more taxpayers than ever will see a Form 1099-K in their mailbox. These forms report payments you received for goods and services from third party platform. If you’re a freelancer, gig worker, small business owner, or online seller, this form will likely apply to you.

Why? Because under the One Big Beautiful Bill (OBBB), the IRS has officially lowered the reporting thresholds starting with the 2025 tax year. That means even smaller-scale sellers and side hustlers are now on the IRS’s radar. Here’s what you need to know.

What’s New for 2025 and beyond

• The 1099-K threshold is now $2,500 (down from $5,000 in 2024).

• No transaction count requirement — one payment over $2,500 could trigger a 1099-K.

• In 2026, the threshold drops permanently to $600 (no transaction count), meaning nearly every gig worker and small seller will be covered.

Does This Apply to You?

You’ll likely receive a 1099-K if:

• You earned $2,500 or more from goods or services transactions.

• Payments were processed through third-party platforms (PayPal, Stripe, Venmo, eBay, Amazon, etc.).

• You used a business or seller account.

🚫 Not included:

• Personal reimbursements (splitting dinner, paying a friend back).

• Gifts or personal transfers.

• Selling personal items at a loss (e.g., selling your old bike for less than you paid).

How to Report 1099-K Income on Your 2025 Tax Return

• Businesses & Freelancers:

  • Report the income on Schedule C (Form 1040) or your business tax return (S corp/partnership).

  • Don’t forget to deduct related business expenses to reduce taxable income.

• Casual Sellers:

  • If you sold personal property at a profit, you may need to report a capital gain on Schedule D.

  • If you sold at a loss, it’s not taxable—but keep documentation in case of questions.

Common Issues to Watch Out For

• Personal payments reported in error → request a corrected 1099-K from the platform.

• Double-counting income → if your business books already reflect sales, don’t report the 1099-K amounts twice.

• Missing expenses → make sure to track mileage, supplies, subscriptions, and other deductible costs.

Next Steps

• Gather 2025 income and expense records now.

• Expect 1099-Ks to start arriving January 2026.

• Book your 2025 tax strategy session with LightUp Tax — we’ll help you report correctly and maximize deductions under the new OBBB rules.

Need help navigating the new 1099-K rules under OBBB?

Book a tax strategy session with LightUp Tax today—we’ll help you stay compliant while maximizing deductions.

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