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Form 1099-K Threshold Reverts to $20,000 and 200 Transactions: What the One Big Beautiful Bill Changed

3 min readMike ThriftMike Thrift
Form 1099-K Threshold Reverts to $20,000 and 200 Transactions: What the One Big Beautiful Bill Changed

On October 23, 2025, the IRS issued IR-2025-107 and Fact Sheet 2025-08 answering FAQs on the Form 1099-K threshold under the One, Big, Beautiful Bill (OBBB). The OBBB retroactively reinstated the reporting threshold in effect before the American Rescue Plan Act of 2021 (ARPA): third-party settlement organizations (TPSOs) — payment apps, marketplaces, and payment card networks — are not required to file Form 1099-K unless gross reportable payment transactions to a payee exceed $20,000 and the number of transactions exceeds 200 in the calendar year.

What Changed

  • ARPA $600 rule is gone. ARPA had lowered the TPSO threshold to $600 aggregate, with no transaction count, starting with 2022 — but the IRS delayed enforcement with transitional relief (phased thresholds for 2023–2024). OBBB restores the pre-ARPA $20,000 + 200 transactions threshold retroactively.
  • Payment cards unchanged. Payment-card transactions (credit/debit) were always reportable without a de-minimis threshold; OBBB does not change that.
  • Backup withholding adjusted. On December 8, 2026, Treasury and IRS proposed regulations reflecting OBBB changes to backup-withholding thresholds for third-party payments — a conforming update to the $20,000 regime.

What Does Not Change

The underlying income tax obligation does not depend on whether you receive a 1099-K. A seller who receives $8,000 in marketplace sales without a 1099-K still has $8,000 of taxable business income if profit exceeds expenses. The threshold governs information reporting by the TPSO, not whether income is taxable.

Record-keeping remains your responsibility: gross receipts, returns, shipping, and fees that net to the 1099-K gross amount must be reconciled to bank deposits. A seller who nets $19,000 in bank deposits but grosses $21,000 in transactions may be near the threshold but must report net profit regardless.

What Sellers and Platforms Should Do

  • Sellers: Do not use lack of a 1099-K as proof of non-taxable income. Track gross sales by platform and reconcile to 1099-Ks when issued.
  • Platforms (TPSOs): Update reporting logic to the $20,000 + 200-transaction test for 2025 and later calendar years, and retain documentation for prior-year transitional filings.
  • Bookkeeping: Post platform gross, fees, refunds, and net payout separately (Income:Sales:Marketplace:Gross, Expenses:Fees:Marketplace, Assets:Receivable:Marketplace). The 1099-K gross should tie to the gross posting, not to net cash.

Simplify Your Financial Management

The $600 scare generated years of confusion; the reversion to $20,000 restores the pre-ARPA norm but does not remove the need to track every dollar. Beancount.io keeps gross, fees, and net by platform in version-controlled plain text — so the 1099-K you receive (or don't) ties to the ledger, not to guesswork. Get started for free and make reporting thresholds a reconciliation, not a tax strategy.

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