Reseller Taxes After the 2025 Law: 1099-K, Income, What to Report

What changed: from $600 back to $20,000 and 200

The rule for payment apps and online marketplaces (the IRS calls them third party settlement organizations) has moved like this:

Notice 2024-85 had planned $2,500 for 2025 and $600 from 2026 on. Section 70432 of Public Law 119-21 replaced that by restoring the earlier exception, effective as if it had been part of the 2021 law. In IR-2025-107 the IRS describes the change as a retroactive return to the threshold that applied before the 2021 law. The IRS’s current Instructions for Form 1099-K, a December 2026 revision already posted, state the same $20,000 and 200 tests.

How the two tests work

Both tests must be passed, and each platform counts only its own payments to you. “Exceeds” means more than: exactly $20,000 or exactly 200 transactions does not trigger a federal form. Run through the 1099-K checker for tax year 2026:

The tests don’t add platforms together. If you received $15,000 in 300 payments on one marketplace and $12,000 in 150 on another, neither has to file a federal form, even though your sales total $27,000. That income is still reportable.

Three more points from the IRS’s Form 1099-K fact sheet and its consumer page:

• A platform may still send you a 1099-K for lower amounts or fewer transactions. Getting one below the threshold doesn’t mean something is wrong.
• Payments by payment card through a merchant account have no threshold: the fact sheet says you should receive a form for as little as $0.01. This matters if you run your own store with a card processor.
• Payee copies are due by January 31 of the following year. If you don’t give a marketplace your taxpayer ID when asked, the fact sheet notes that payments may be subject to backup withholding.

State thresholds: which are confirmed

Your state can require a 1099-K at a lower amount, and the IRS fact sheet warns that you may then get a form even though you are under the federal threshold. The states below are those we could check; the rule follows the payee’s address. As of October 5, 2026:

Same sales, different states

The state rule follows your address, not the buyer’s. Take one reseller with $8,400 of payments in 310 transactions from a single marketplace in 2026, and move them around the country with the 1099-K checker:

The tax rules on that $8,400 don’t change from row to row: the same sales are reported the same way on the federal return in every state. What changes is whether a form arrives, and which state agencies see a copy.

Massachusetts’ page also tells residents who get a 1099-K to include the total payment amount on their state income tax return, and notes that the form shows the full payments received, not profit. Other states’ return instructions differ.

To check your own state, search your state revenue department’s site for “1099-K” and look for a dated page, or ask the department directly. A state form changes what gets reported, not what is taxable.

The form shows gross payments, not your profit

Box 1a of a 1099-K is a gross figure. The IRS page What to do with Form 1099-K says the gross payment amount isn’t adjusted for fees, credits, refunds, shipping, cash equivalents or discounts, that those items are not taxable income, and that you can deduct them from the gross amount. Publication 334 adds that a 1099-K may include amounts that aren’t part of your receipts, such as sales tax (Pub 334).

A worked sketch shows how far gross and taxable can be apart. These are illustrative numbers for a reseller filing Schedule C for 2026:

The mileage line splits at July 1 because the IRS business rate was 72.5¢ for January 1 – June 30, 2026 and 76¢ for July 1 – December 31, 2026. Income tax and self-employment tax are figured on the profit, not on the $30,000. The detailed rules for each line are in the inventory, mileage and profit guides listed below.

When a form looks wrong

Forms do arrive with mistakes: a duplicate, payments that aren’t yours, or personal reimbursements from friends and family. The IRS page on what to do with a 1099-K lays out the steps:

• Contact the issuer named as the filer in the top-left corner of the form and ask for a corrected form; if the form shouldn’t exist, ask for one showing zero.
• Keep a copy of the original, the corrected form and your correspondence.
• Don’t contact the IRS about the correction; it says it can’t correct the form for you.
• Don’t wait to file. If the gross amount is wrong and no corrected form arrives, the IRS says to report the amount from the incorrect form in the entry space at the top of Schedule 1.

Shared accounts, such as one card terminal used for two businesses, have their own steps on the same page.

Business sales, personal items or a hobby

The IRS’s reporting depends on what kind of selling it is:

• A business (selling for profit with continuity and regularity) reports gross receipts and expenses on Schedule C. A sporadic activity or a hobby does not qualify as a business, according to the Schedule C instructions.
• Personal items sold at a loss are not taxable, but the loss isn’t deductible either. The IRS says to report the 1099-K amount in the entry space at the top of Schedule 1 so you don’t pay tax you don’t owe, or report the sale on Form 8949. The fact sheet’s example: a refrigerator bought for $1,000 and sold for $700 is entered as $700 at the top of Schedule 1.
• Personal items sold at a gain are taxable, reported on Form 8949 and Schedule D.
• A hobby reports its income on Schedule 1, line 8j, per Publication 525, which also says hobby losses aren’t deductible from other income.

One inconsistency to know about: the What to do with Form 1099-K page lists hobby sellers with the self-employed who report on Schedule C, which doesn’t match Publication 525 or the Schedule C instructions. If your selling sits near that line, it is a question for a tax professional.

All of this applies whether or not a form arrives. The fact sheet is direct: “All income, no matter the amount, is taxable unless the tax law says it isn’t — even if you don’t get a Form 1099-K.”

Self-employment tax in brief

If your selling is a business, Schedule C profit is also subject to self-employment tax, the Social Security and Medicare tax for people who work for themselves. The IRS rate is 15.3% (12.4% Social Security and 2.9% Medicare), and it applies when net earnings from self-employment are $400 or more (IRS); Pub 334 figures those net earnings as 92.35% of net profit. For 2026, the Social Security part stops at $184,500 of net earnings (Pub 334).

On the $9,115 example above:

Self-employment tax applies to the profit, not to the gross on any 1099-K, and it applies whether or not a form was filed. On the example, $100 more profit ($9,215.00) would raise self-employment tax from $1,287.90 to $1,302.04.

Income tax comes on top and depends on your whole return; the qualified business income deduction, made permanent by P.L. 119-21, may lower it. If you expect to owe at least $1,000 for 2026 after withholding and credits, Form 1040-ES describes estimated payments; the 2026 dates are April 15, June 15 and September 15, 2026, and January 15, 2027 (Form 1040-ES).

Year-end checklist

Before you or your preparer file for the year:

1. List every platform and payment app you were paid through, with each one’s gross payments and number of transactions for the year.
2. Mark which ones should send a 1099-K (over $20,000 and over 200 federally, or your state’s lower amount), and watch for forms by January 31. A form you didn’t expect isn’t an error by itself.
3. Download each platform’s annual sales and fee reports. You need fees, refunds, shipping and sales tax collected to get from gross to receipts.
4. Separate personal items from inventory. Keep what you paid for personal items sold at a loss; it supports the zero-out entry.
5. Total your cost of goods sold: opening inventory, purchases (with the sales tax you paid on them), and closing inventory.
6. Add up expenses: labels, supplies, and mileage from a log kept during the year at the rate in force on each trip date.
7. Check whether self-employment tax and estimated payments apply, and note any payments already made.
8. Take the numbers to a tax professional or into your tax software, and keep the records with your return.

The detailed guides

Each topic above has its own guide, with worked examples and the IRS or state pages it relies on:

• Got a 1099-K for selling your own used stuff? walks through the Schedule 1 and Form 8949 entries for a closet clean-out, including the IRS’s refrigerator example.
• When does flipping become a business? covers the IRS factors and what changes for deductions.
• Deducting sourcing trips explains the 72.5¢ and 76¢ rates for 2026 and the mileage log the IRS expects.
• Unsold inventory and cost of goods works through Schedule C lines 35–42.
• Do resellers pay quarterly taxes? covers set-aside math, safe harbors and due dates.
• Do resellers have to collect sales tax? explains what marketplaces collect for you and what stays your job.
• Sales tax on marketplace fees covers the states where Etsy and Whatnot charge sales tax on their own fees.

Next step

Enter each platform’s payments and transaction count in the 1099-K checker to see which forms to expect for 2025 or 2026, including your state’s rule (it runs in your browser, and nothing you type is sent anywhere), then use the tax set-aside calculator to estimate self-employment tax on your profit.