2025 Update: New 1099-K Reporting Thresholds Under the One Big Beautiful Bill Act (OBBBA)
For 2025, small business owners need to be aware of a major change to the Form 1099-K reporting requirements due to the enactment of the One Big Beautiful Bill Act (OBBBA), Pub. L. No. 119-21.
This legislation officially reverses the lower reporting threshold introduced by the American Rescue Plan Act of 2021 (ARPA)—bringing back the original 1099-K thresholds that existed before 2022. Here’s what you need to know to stay compliant.
- 1099-K Reporting Thresholds Reinstated to Pre-2022 Levels
The OBBBA reinstates the old reporting thresholds for third-party settlement organizations (TPSOs) such as PayPal, Venmo, Cash App, Square, Etsy, and eBay.
For 2025 (and retroactively for prior years since ARPA):
A TPSO must issue a Form 1099-K to a payee only if both of the following are true:
- The gross amount of reportable payment transactions exceeds $20,000, and
- The number of transactions exceeds 200 in a calendar year.
This is a significant change from the $600 threshold (with no transaction minimum) that ARPA enacted but the IRS never fully implemented due to transition relief. Under OBBBA, that lower threshold has now been repealed.
Learn more directly from the IRS:
👉 IRS – Understanding Your Form 1099-K
- What This Means for Small Business Owners
If you use payment apps or online marketplaces to receive payments for goods or services, you’ll now receive a Form 1099-K only if you:
- Have over 200 transactions, and
- Collect over $20,000 in gross payments within the year.
If you do not meet both thresholds, you will not receive a 1099-K from the TPSO.
However, it’s important to note:
You are still required to report all taxable business income on your tax return, even if you don’t receive a Form 1099-K.
See IRS clarification: IRS FAQs on Form 1099-K (Fact Sheet 2025-8)
- IRS Guidance and FAQs
The IRS issued updated guidance in Fact Sheet 2025-8, confirming the reinstatement of the $20,000/200-transaction rule for 2025 and retroactively for prior years.
This guidance replaces all previous FAQs and clarifies that the ARPA $600 rule will not take effect.
More details: IRS Fact Sheet 2025-8 (1099-K Reporting FAQs)
- Reporting Your Income Properly
Even without receiving a 1099-K, you must still report all income earned from business or self-employment activities.
- Sole proprietors should report income on Schedule C (Form 1040).
- Always reconcile the income shown on your 1099-K with your own bookkeeping records.
- Be aware that 1099-K totals may include:
- Reimbursements
- Refunds
- Personal payments
- Transaction fees
These may not all represent taxable income—so accurate reconciliation is key.
- Avoiding Confusion and Common Mistakes
The reinstated thresholds aim to reduce confusion for casual sellers and personal users of payment apps. However, small business owners should still:
- Maintain detailed income and expense records throughout the year.
- Classify transactions properly (business vs. personal).
- Contact the TPSO if you receive a 1099-K in error (for example, for personal transactions).
If an incorrect form is issued, you can request a corrected 1099-K from the payment processor.
Summary Table: 1099-K Reporting Thresholds for 2025
| Year | Gross Payments Threshold | Transaction Threshold | Both Must Be Met? |
| 2025 | $20,000 | 200 | Yes |
Key Takeaway
For 2025, you’ll only receive a Form 1099-K if you have more than $20,000 in gross payments and more than 200 transactions in the year.
Even if you don’t receive the form, the IRS still requires you to report all taxable income from business or self-employment activities.
Need Help Understanding 1099-K Reporting Rules?
If you’re unsure how these new thresholds affect your tax reporting or bookkeeping, Contact us can help.
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