When Congress passed the American Rescue Plan Act (ARPA) in 2021, it lowered the Form 1099-K reporting threshold to $600 — with no transaction minimum. That rule, even if delayed several times, would have drastically expanded the number of Forms 1099-K issued, pulling in even casual transactions like splitting rent or selling used personal items. However, the One, Big, Beautiful Bill (OBBBA), enacted in 2025, reversed that change retroactively. The IRS is now aligning its guidance and confirming that the pre-2021 thresholds apply for 2025 and onward (unless further amended).
For tax year 2025, the correct threshold for Form 1099-K reporting is as reminded by the latest IR-2025-107 communication:
- Gross payments exceeding $20,000 AND more than 200 transactions.
If you don’t meet both tests, the platform is not required to send you a Form 1099-K for 2025. That said, you still must report all taxable income, even if no Form 1099-K is issued.
Please, see the following examples to learn more about each scenario:
- Maria, a freelance graphic designer, received $18,000 from 120 clients through PayPal in 2025.
→ No Form 1099-K required (she did not exceed $20,000 and 200 transactions).
But Maria must still report the $18,000 as income on her Schedule C. - Luis, an Etsy seller, made $22,000 from 250 sales in 2025.
→ He will receive a Form 1099-K from Etsy, and the IRS will receive a copy too.
At GG CPA Services, we expect the reversion to reduce confusion for many small business owners, freelancers, and independent contractors who use digital payment apps. The simpler threshold ($20,000 / 200 transactions) aligns with the rules most taxpayers were used to before 2021 — and should make year-end reporting a bit smoother. Still, taxpayers should be aware that the IRS continues to expand electronic matching and audit capabilities around third-party payments. Accurate record-keeping and CPA review remain essential to avoid underreporting income.
Bonus 1099-MISC and 1099-NEC: From 2026, the reporting threshold is met if the amount of payments to a recipient totals $2,000 or more.
Link IRS – FAQ
