The 1099-K threshold for resellers in 2026 — what actually changed

Every year around January, reseller forums light up with the same question: "What's the 1099-K threshold this year?" The honest answer is that the number has moved three times in four years, and the rules are not as simple as a single dollar amount.

Here's what the 2026 landscape actually looks like, and the paperwork that quietly destroys a tax season if you don't prepare.

The federal threshold for 2026

As of January 1, 2026, marketplaces (eBay, Etsy, Poshmark, Mercari, Whatnot, Depop, StockX, Grailed, and anyone else running third-party settlement) are required to issue a 1099-K at $2,500 in gross payments. There is no separate transaction-count trigger anymore.

This is the IRS's stepped phase-in:

• 2023 and earlier: $20,000 and 200 transactions
• 2024: $5,000
• 2025: $2,500
• 2026 and beyond: planned $600 (not yet finalized — most recent guidance
• holds at $2,500 through the 2026 tax year)

Check the IRS website for the current year's number before filing. The threshold has moved more than once during filing season.

What "gross" actually means

The number on your 1099-K is gross payments received, not profit. That means the platform reported:

• Every sale price, before fees
• Every shipping payment the buyer paid you
• Refunds are NOT subtracted

So if you sold $4,000 on eBay and $1,800 was refunds, your 1099-K still says $4,000. You report the full amount on your return and deduct the refunds, fees, and cost of goods separately. If you don't, the IRS computer matches gross-only and flags you.

State thresholds are different

Several states have lower thresholds than the federal number:

• Massachusetts, Vermont, Virginia: $600 (unchanged for years)
• Maryland, District of Columbia: $600
• Illinois: $1,000 + 4 transactions
• New Jersey: $1,000

If you live in any of these, you will get a 1099-K even if the federal number doesn't trigger one. The platforms still have to report to the state.

The three things that quietly wreck your return

1. Personal sales treated as business income. If you sold a used couch on Facebook Marketplace for $800 and paid $1,200 for it years ago, that's a $400 personal loss — not taxable income. But it will still show up on your 1099-K. You report it as a hobby sale with no deduction allowed, or as a personal-use item at a loss. Ignoring it is what triggers an audit.

2. Cost-of-goods with no receipts. The IRS expects cost basis on every item you deduct. A shoebox of thrift-store receipts from 2023 is not enough. You need per-item records with date, source, and cost. This is the single biggest reason resellers overpay their taxes — they can't prove COGS so they deduct nothing.

3. Mileage and supplies undercounted. Most resellers forget:

• Mileage to thrift stores, estate sales, and the post office (IRS rate
• is ~$0.67/mile in 2026)
• Shipping supplies: mailers, tape, thermal labels, boxes
• Portion of home internet and phone used for the business
• Storage space (if you have a dedicated room, partial home-office
• deduction)

A reseller doing 30 hours a week of pickups and shipping typically has $2,000–$5,000 of legitimate deductions they never track.

What to do now

• Pull your last three months of platform reports. Every platform has
• a sales CSV. Download them.
• Reconcile refunds and cancellations against the gross numbers. You
• need this for the return.
• Lock in cost basis per item going forward. Per-lot averaging is
• the reason most resellers overpay on the small items and underpay on
• the big ones.
• Track mileage from day one. Apps like MileIQ or just a notebook
• work. $0.67/mile compounds fast.

If you're using a spreadsheet, the spreadsheet is usually where cost basis dies — one column called "cost" with a lot price divided evenly across 20 items. Your real profit on a $180 sneaker pair and a $12 t-shirt is not averaged. It's two different items.

PalmFlow tracks cost basis per item, platform fees on every sale, and generates a 1099-K-ready export that reconciles gross against refunds, fees, and COGS. Free plan, 50 items, no card. If you're doing your taxes in April with a Google Sheet, this is the year to stop.

See how PalmFlow compares to the dedicated bookkeeping tools: My Reseller Genie and Flipwise.

Disclaimer: this is not tax advice. Talk to a CPA for your specific situation, and check the IRS site for the current year's threshold before filing.

Published by PalmFlow. We build inventory software for resellers.