What You Need to Know About the IRS's New 1099-K Rules Under the One Big Beautiful Bill

The IRS's new Fact Sheet FS-2025-08, released in October 2025, updates and clarifies how Form 1099-K will work under the One Big Beautiful Bill Act (OBBBA). These changes will affect anyone who sells goods or services online, uses payment apps for business, or processes transactions through third-party networks.

The updates reflect a major reset: OBBBA reinstates the old $20,000 and 200-transaction thresholds, reversing the much lower $600 threshold introduced under the American Rescue Plan Act (ARPA) of 2021. But that's not the only important change, the new FAQ gives more guidance on what counts as income, how to fix errors, and what taxpayers should expect in 2026.

Here are five takeaways that matter most for sellers, platforms, and tax pros.

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1. The $600 Threshold Is Gone: the Classic Rule Is Back

The OBBBA retroactively restores the pre-ARPA reporting threshold:

a Form 1099-K must only be issued when gross payments exceed $20,000 and more than 200 transactions occur in a year.

That means casual sellers, someone who occasionally sells clothes, furniture, or tickets, won't get a 1099-K unless they cross both thresholds.

However, the IRS reminds taxpayers that income is taxable whether or not it's reported on a 1099-K. Selling a personal item at a loss doesn't create income, but selling at a profit does, and that gain must still be reported.

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2. Form 1099-K Still Applies to Every Payment-Card Transaction

Even though the OBBBA eased the rules for payment apps and marketplaces, credit- and debit-card payments have no threshold at all.

If you accept any card payment, even a single $1 transaction, your merchant processor will still issue a Form 1099-K.

For small businesses and gig-economy workers, that means continuing to track card receipts carefully and matching them against other records at tax time.

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3. Clarified Rules for Personal Transactions and Mistaken Forms

One of the most useful parts of the new FAQ deals with how to handle incorrect or non-taxable 1099-Ks.

• Gifts and reimbursements, money exchanged between friends or family, are not taxable and should not be reported.

• If you receive a Form 1099-K for a personal payment, you can "zero it out" when filing by reporting the amount and offsetting it on Schedule 1 (Form 1040).

• Erroneous forms should first be corrected through the filer, but taxpayers shouldn't delay filing if they can't get a new form.

The IRS even includes a step-by-step example: if you got a $11,000 1099-K because your roommate reimbursed you for rent through Venmo, you report the $11,000 on Schedule 1 and subtract the same amount, ensuring the transaction doesn't affect taxable income.

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4. Ticket Sales and Executive Order 14254: The IRS Is Watching Resellers

A new section connects 1099-K reporting to Executive Order 14254, aimed at curbing unfair practices in the live-entertainment market.

The IRS now explicitly states that income from ticket resales is taxable, and that ticket marketplaces must issue 1099-Ks when sellers exceed the federal threshold.

Platforms that aren't considered payment settlement entities may still need to file Form 1099-NEC or Form 1099-MISC if they pay sellers more than $2,000 after 2025.

This crackdown means digital ticket flippers, concert resellers, and online marketplaces should expect tighter compliance and more reporting.

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5. Third-Party Platforms Have Stricter Filing Duties

The fact sheet reaffirms that third-party settlement organizations (TPSOs), such as Venmo, PayPal, Etsy, or StubHub, are the entities responsible for filing and furnishing Forms 1099-K.

Key details:

• TPSOs that fail to file are subject to penalties only when transactions exceed $20,000 and 200 payments, creating a "de minimis" safe harbor.

• Payment settlement entities cannot charge users fees to produce or mail 1099-Ks.

• All filers handling 10 or more information returns (including 1099-Ks) must now submit them electronically.

• Payee statements must be sent to users by January 31 and to the IRS by March 31 if filed electronically.

The IRS also clarifies that TPSOs shouldn't duplicate reporting: if a transaction is already captured on a 1099-K, it should not appear on a 1099-MISC or 1099-NEC.

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Why These Updates Matter

The IRS's new guidance aims to strike a balance between compliance and fairness. For taxpayers, it means fewer unnecessary forms. For businesses and marketplaces, it means clearer rules and electronic filing requirements.

For gig workers and small sellers, it underscores the importance of recordkeeping, especially distinguishing personal transactions from sales.

Although the law relaxes the threshold, reporting and taxability haven't gone away, they've just been redefined under the One Big Beautiful Bill.

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How Margen Can Help

Understanding whether your 1099-K income is taxable, how to handle erroneous forms, or whether your business counts as a TPSO can be tricky. Margen can analyze your records and IRS guidance in real time, helping you answer questions like:

"Do I need to report ticket resale income this year?"

"If I get a 1099-K for personal payments, how do I fix it?"

"Is my marketplace responsible for filing the form or am I?"

By linking your actual transaction data with the latest IRS updates, Margen helps you stay accurate and penalty-free.

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For the full text of IRS Fact Sheet FS-2025-08, see IRS.gov/pub/taxpros/fs-2025-08.pdf.