Is the 1099-K Threshold Really $600 in 2026? Here's What Changed
By Yan Payments
Is the 1099-K threshold $600 in 2026?
No, the IRS is not sending you a 1099-K for $600 in 2026. For third-party payment apps and online marketplaces, the threshold is back to $20,000 and more than 200 transactions in a year, both conditions required. The $600 figure comes from a 2021 law that got delayed, then undone, before it ever actually applied to anyone.
Where did the $600 number come from?
In 2021, the American Rescue Plan Act lowered the Form 1099-K threshold for third-party settlement organizations, think Venmo, PayPal, Cash App for Business, Etsy, eBay, from the old $20,000-and-200-transactions test down to a flat $600 with no transaction minimum at all. It was supposed to take effect for the 2022 tax year.
It never did. The IRS delayed it twice, running transitional thresholds of $20,000 for 2022, then a planned $5,000 for 2023 and 2024 that also got pushed back. Plenty of blog posts, tax software marketing, and social media posts from that period are still floating around saying “starting next year, you’ll get a 1099-K for $600,” and that’s the stale information still circulating in 2026.
What’s the actual 1099-K rule now?
In 2025, the One Big Beautiful Bill Act rewrote the law again, this time restoring the original $20,000-and-200-transaction threshold, retroactive to the 2022 tax year. The IRS confirmed this in Fact Sheet 2025-08, issued October 23, 2025: a third-party settlement organization only has to file a 1099-K on you if your payments for goods and services topped $20,000 and you had more than 200 transactions in the calendar year. Both conditions have to be met. The $600 threshold never took legal effect for anyone, at any point.
Does this apply to the card payments you process through us?
No, and this is the part that trips people up. The $20,000/200-transaction threshold applies to third-party settlement organizations, the Venmos and PayPals of the world. Merchant acquirers, the companies (like us) that process your Visa, Mastercard, Amex, and Discover card transactions, have no reporting threshold at all. If you take one card payment of $50 all year through your merchant account, you’ll still get a 1099-K for it. That’s been true for years and hasn’t changed.
So if you’re a restaurant or retail shop that only takes payment through your Clover terminal or card reader, this whole $600-vs-$20,000 debate doesn’t affect you, you were already getting a 1099-K regardless of volume. It matters more if your business also collects payment through Venmo, Zelle for Business, a Cash App business profile, or sells on a marketplace like Etsy or eBay, since those are the accounts where the threshold question actually applies.
Quick reference: which payment types have a 1099-K threshold?
- Card payments via merchant acquirer (your Clover/card terminal): no threshold, every transaction reportable
- Third-party apps (Venmo, PayPal, Cash App Business) for goods/services: $20,000 AND 200+ transactions
- Peer-to-peer personal payments (splitting a dinner bill, gifts): not reportable regardless of amount
Does the 1099-K threshold affect whether income is taxable?
Whether or not you receive a 1099-K has nothing to do with whether the income is taxable. If you sold $15,000 worth of goods through a marketplace this year and don’t hit the 200-transaction mark, you won’t get a form for it, but you still owe tax on that income and need to report it yourself. The threshold only controls when the IRS requires someone else to tell them about your income; it was never a tax-free allowance.
A worked example
Say a food truck owner takes most sales through their Clover terminal, but also uses a Cash App Business account for catering deposits and a few recurring customers who prefer to pay that way. The Clover transactions were always going to show up on a 1099-K from the merchant acquirer, no threshold involved, that part hasn’t changed and isn’t new. The Cash App Business account only crosses into reporting territory if those catering payments add up to more than $20,000 and more than 200 separate transactions in the year. For most small operators, that second number is the one actually worth tracking, since a handful of large catering deposits might clear $20,000 without ever getting close to 200 transactions, in which case no 1099-K gets issued from that account at all.
What should you do if you’re not sure?
If you run payments through multiple channels, card terminal, invoicing, a payment app, it’s worth a few minutes to check which of those accounts are close to the $20,000/200 line this year, so a 1099-K showing up in January isn’t a surprise. And if you want to simplify how you collect payment so it’s not split across five different apps and platforms, that’s a conversation worth having with a payments specialist (/#cta).
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