Navigating the 1099-K Threshold: What Small Businesses Need to Know

Get ready for a bit of good news that will simplify things for many of you. After years of confusion and a lot of back and forth, Congress has finally acted on the 1099-K reporting thresholds, and the new law is a huge win for small businesses and independent contractors.

For a quick recap: We’ve been living in a state of flux since the American Rescue Plan proposed a new $600 reporting threshold. This was followed by multiple IRS delays and a planned "phased-in" approach that never fully took effect.

Well, all of that has changed. The new One Big Beautiful Bill Act has officially repealed those proposed changes.

Here’s the new (or rather, old) rule you need to know:

The 1099-K reporting threshold is now officially back to what it was before all this confusion began: payment apps and online marketplaces like PayPal and Venmo are only required to issue a Form 1099-K if you have both:

• More than $20,000 in gross payments for goods and services, AND

• More than 200 individual transactions in a calendar year.

This change is effective for your 2025 taxes and is a permanent rollback of the previous plans. This means fewer forms and less administrative burden for millions of casual sellers and small businesses who wouldn't have met this higher threshold.

Does this mean you don't have to report your income? Absolutely not. All business income is still taxable, regardless of whether you receive a 1099-K. This change simply affects when a third-party platform is required to send you a form.

The key takeaway is that now is the perfect time to get your books in order. A solid record-keeping system is your best defense against tax season stress, no matter what the reporting rules are.

As always, if I can be of any help, please reach out to me at; mdaviscpb@qbocleanups.com.