Form 1099-K Threshold in 2026: A Guide to the OBBBA Update

In life and in taxes, change is the only constant. This is especially true for Form 1099-K, with the IRS continuously moving the goalposts on its rules and thresholds over the years.

So, if you’re confused about what actually triggers reporting, you’re not alone. With the passage of the One Big Beautiful Bill Act (OBBBA), the IRS has reverted the 1099-K reporting threshold to $20,000 in gross payments and more than 200 transactions for third-party settlement organizations (TPSOs).

But try not to break your head over this. This guide will clear the air regarding Form 1099-K threshold changes, explain your reporting requirements, and help make your filing with the IRS is stress-free.

What Does Form 1099-K Report?

It is one of the many information returns of the IRS. Specifically, the 1099-K is used to report payments processed through payment cards and TPSOs such as online marketplaces and payment apps.

Form 1099-K reports payments received for goods and services in a tax year from:

• Payment cards (credit, debit, or stored value cards such as gift cards)

• TPSOs such as online marketplaces and payment apps (PayPal, Venmo, Etsy, crowdfunding platforms, etc.)

Form 1099-K shows gross payments before any deductions such as fees, refunds or other adjustments. Because the IRS uses the gross payments on the form to cross-check if all income was reported accurately and helps improve voluntary tax compliance.

Who are the recipients of this form? They could be sellers who accept payments via payment apps or online marketplaces, contractors or freelancers receiving payments through a payment platform, or a merchant accepting card payments.

Note: Payments that are made for personal reasons shouldn’t be reported on 1099-K. For example, splitting house rent or dinner bill with a friend, sending a birthday gift to a family member and other personal payments.

What’s The Current Form 1099-K Threshold?

The reporting threshold for Form 1099-K isn’t the same for all kinds of payments discussed earlier. It depends on how those payments were processed (third-party network transactions or payment card transactions)

The current threshold for TPSOs is:

• More than $20,000 in gross payments, and

• More than 200 transactions.

Both these conditions have to be met by TPSOs in a calendar year to be able to issue 1099-K federally.

Meanwhile, if the transaction was via a payment card, there is no threshold amount that must be met. So, a business might get a 1099-K even if the payment was just $1 through a payment card.

Note: This is something easy to overlook. Not receiving a Form 1099-K doesn’t mean your income is off the hook. The IRS expects taxpayers to report all taxable income whether or not a 1099-K is issued.

OBBBA & 1099-K Threshold Changes

Form 1099-K has been in a constant state of flux over the last tax seasons. The current federal reporting thresholds of more than $20,000 and over 200 transactions for TPSOs are a recent change made due the passage of the OBBBA in 2025.

The American Rescue Plan Act of 2021 (ARPA) reduced the federal TPSO reporting threshold to more than $600 with no minimum transaction requirement. This was much lower than the pre-ARPA requirement of $20,000 and 200 transactions.

After small business owners and tax professionals raised concerns over the added administrative burden, the IRS delayed its implementation. It then announced a $5,000 threshold for 2024 and a $2,500 threshold for 2025, with the $600 threshold set to take effect in 2026.

But in July 2025, OBBBA retroactively reinstated the pre-ARPA threshold  i.e. $20,000 and 200-transaction threshold for 2025 and later years.

This means:

• The $600 federal TPSO threshold will not take effect.
• The federal TPSO reporting is back to more than $20,000 and more than 200 transactions.

Form 1099-K: Other Caveats to Know

When it comes to 1099-K reporting, the threshold changes aren’t the only rules that matter.  Even if your payments are below the federal TPSO threshold, there’s a possibility of receiving a Form 1099-K. This is how it can happen:

•  A platform may choose to issue a 1099-K voluntarily

• Your state may have a lower reporting threshold

• When the payment is processed through a payment card
• Separate reporting and withholding rules might apply to your situation

Key Deadlines

As with all information returns, Form 1099-K also has strict deadlines:

• Recipient copy: January 31

• Paper-filing with IRS: February 28

• E-filing with IRS: March 31

If you need an extension to file Form 1099-K, you can request using Form 8809. But make sure that you file this form before the original due date so that you get a 30-day extension. Note that this extension is only to file with the IRS and does not apply to the deadline for sending recipient copies.

What’s Next for Businesses & Platforms?

The threshold changes due to OBBBA impacts millions of taxpayers including online sellers, gig workers, freelancers, marketplaces, and tax compliance teams, among other. While threshold update is much less burdensome and brings clarity to businesses and individuals, it also requires careful planning and updating processes to incorporate the new rules.

Businesses should revisit their Form 1099-K filing logic, separate federal and state threshold rules, update help center content and payee communications, and review card-payment reporting independently from TPSO reporting. Check how these new rules fit with your books and make sure you’re ready before the filing season.

FAQs

1.Is there a minimum dollar amount to file Form 1099-K?

Generally, TPSOs must file 1099-K when the gross amount of payments to a recipient exceeds $20,000 and the number of transactions is more than 200 in a calendar year. This is the federal reporting threshold for TPSOs.

2.When was the 1099-K threshold changed from $600 to $20,000?

The ARPA $600 threshold did not take effect as the current federal TPSO reporting threshold. In 2025, the OBBBA retroactively reinstated the old $20,000 and 200 transaction rule which means requiring more than $20,000 in gross reportable payment transactions and more than 200 transactions.

3.Is there a possibility for you to receive a 1099-K if payments are under $20,000?

Yes. Because a platform may issue a 1099-K below the federal threshold voluntarily, your state may have a lower threshold, or the transaction may be subject to a different reporting requirement altogether.

4.What about credit card payments?

There is no minimum reporting threshold for payment card transactions, according to the IRS.

5.Should personal payments be reported using Form 1099-K?

No. 1099-K is only for reporting payments for goods and services.