What Freelancers Need to Know About the New 1099-K Threshold Under the ‘One Big, Beautiful Law’

In a major update to the legislation – the ‘One, Big, Beautiful Bill’ (‘OBBB’) – this is the case rolled back the reporting threshold for Form 1099-Kwhich restores a more familiar standard for many self-employed people.

These changes apply to 2025 tax returns that will be filed in 2026.

This change is more than just a technical adjustment. It affects the way freelancers track their income, prepare for the upcoming tax season, and interact with digital payment platforms.

Let’s take a look at what’s changed, what it means for your business, and how you can stay compliant in this new landscape.

What is Form 1099-K?

First, a refresher on Form 1099-K. It’s one IRS information return used to report payments received through TPSOs for goods or services. It is designed to improve voluntary tax compliance by ensuring that income received through digital platforms is properly reported.

If you receive payments through platforms like Etsy, Uber, DoorDash, or freelance marketplaces like Upwork or Fiverr, you may receive a 1099-K if your activity meets the threshold. However, under the reinstated rules, many freelancers will no longer receive this form unless their volume and income are substantial.

It’s important to note that Form 1099-K is not the only way the IRS tracks income. Just because you don’t receive one doesn’t mean your income isn’t taxable. The responsibility for reporting income remains entirely on your shoulders.

Please note that your state may have a lower reporting threshold for TPSOs, which may result in you receiving a Form 1099-K even if total gross payments and transactions do not exceed the federal reporting threshold.

Changes to 1099 reporting under the one big, beautiful bill

Under the One Big Beautiful Bill, third-party settlement organizations (TPSOs) – such as PayPal, Venmo (for businesses), Stripe, Square and others – are now only required to issue a Form 1099-K if:

• The gross amount of reportable transactions exceeds $20,000, and
• The number of transactions exceeds 200.

This restores the threshold that was in place before 2021, and reverses the floor introduced by the American Rescue Plan Act of 2021 (ARPA), which had lowered the reporting requirement to just $600, regardless of the number of transactions.

The 1099-K Reporting Rollback: Why This Matters for Freelancers

Rolling back to the $20,000/200 transaction reduces the chance of receiving unexpected tax forms and simplifies the reporting process for low-volume users.

However, more emphasis is also being placed on keeping personal data. Without a 1099-K to ask you, it’s up to you to accurately track and report your income. This is especially critical for freelancers who receive payments across multiple platforms or who combine personal and business transactions.

Freelancers must keep track of all 1099-K income

Even if you don’t receive a 1099-K, you are still required to report all taxable income. Here are some practical steps to help you stay ahead:

• Track your income independently. Don’t rely solely on tax forms to know what you’ve earned. Use accounting software, spreadsheets, or even a simple ledger to record every payment received for freelance work.
• Separate personal and business transactions. Use special accounts or payment tags to avoid confusion. If you use platforms like Venmo or PayPal, make sure business transactions are clearly labeled and kept separate from personal transactions.
• Check the platform policies. Some TPSOs may still issue 1099-Ks based on their own internal thresholds or business practices. Stay informed about how your payment platforms handle reporting.
• Consult a tax professional. Especially if you’re not sure how to report 1099 income or what the state rules are. A CPA familiar with freelance tax issues can help you avoid costly mistakes and maximize your deductions.

Looking ahead: 1099-K and other income reporting is required

Freelancers must remain vigilant; Legal changes can quickly change reporting requirements, and digital payment platforms can still issue forms based on their own policies. For example, some platforms may choose to issue 1099-Ks at lower thresholds to simplify their own compliance or reduce audit risk.

Additionally, the IRS continues to look for ways to improve tax compliance in the gig economy. Future legislation could revise thresholds, redefine reportable transactions, or introduce entirely new forms.

Freelancers should also be aware of state-level reporting requirements. Some states have their own thresholds for 1099-K reporting, which may differ from federal rules. If you live in a state with aggressive tax enforcement, you can still receive forms even if you fall below the federal threshold.

The Essentials of 1099-K and Your Freelance Business Obligations

Freelancers are still responsible for reporting all taxable income regardless of whether you receive a form. The best way to protect yourself is through proactive record-keeping and informed tax planning.

Here’s a quick summary of smart moves every freelancer should make:

• Keep detailed records of all income and expenses.
• Use separate accounts for business and personal finances.
• Stay informed about IRS updates and platform policies.
• Work with a tax professional who understands freelance work.
• Don’t wait until tax season, plan ahead all year long.

Understanding the changing tax landscape for your freelance business can make tax season less stressful and more predictable. Whether you’re a seasoned consultant with a full-time business or a weekend worker, understanding your obligations and staying organized can help you thrive in today’s changing tax landscape.