If you sell on eBay, run an Etsy shop, or take payments through Venmo, PayPal, or Cash App, the rules around tax forms have flipped again for 2026. Honestly, this time the news is good. For years, casual sellers worried they would get hit with a 1099-K just for unloading a few used items online. Congress finally hit the brakes on that plan. The threshold is back to where it sat before 2021, and most South Carolina side hustlers and resellers will not see a 1099-K in their mailbox this tax season.
Let me walk you through what changed, why it matters, and the part that did not change at all.
What Actually Changed
Back in 2021, the American Rescue Plan Act lowered the 1099-K reporting limit to $600 with no minimum number of transactions. That meant even a single payment of $601 through Venmo or PayPal could have triggered a tax form. The IRS delayed that rule a few times because the rollout was a mess, but it was still hanging over every casual seller’s head.
Then on July 4, 2025, the One Big Beautiful Bill Act became law and wiped that $600 rule off the books for good. The threshold is now back to where it sat before 2021. For the 2026 tax year, third party payment platforms only have to send you a 1099-K if your total payments crossed $20,000 AND you completed more than 200 transactions. Both conditions have to apply. Hit one but not the other, and no form gets generated.
This change is also retroactive to 2022, which clears up a lot of paperwork confusion from earlier years.
What This Means for Casual eBay & Etsy Sellers in South Carolina
Say you cleaned out your garage last spring, listed a bunch of stuff on Facebook Marketplace and eBay, and pulled in around $4,000 over the year across maybe 40 transactions. Under the old proposed rule, you would have received a 1099-K. Under the rule that actually applies for 2026, you will not.
Same idea for Etsy sellers running a small shop on the side. If your shop did $15,000 across 180 orders, you stay below both limits. No form gets sent, and the IRS will not have a piece of paper with your name on it from Etsy.
Venmo and PayPal users sit in the same spot. As long as your goods and services payments stayed under $20,000 or under 201 transactions, you are below the federal reporting line.
The Income Is Still Taxable Though
Here is where most people trip up. Just because no 1099-K shows up in the mail does not mean the income disappears. The IRS still expects you to report any profit from selling goods or services, even if a third party never sent a form. This part has not changed and probably never will.
For South Carolina residents, that rule applies on both your federal return and your state return.
Selling Personal Items at a Loss
If you sold an old couch for $200 that you originally bought for $800, that is a loss on a personal item. Personal item losses are not deductible, but they are also not taxable. You owe nothing on that sale.
Selling Personal Items at a Gain
If you bought a vintage guitar for $400 and flipped it for $1,500, that is an $1,100 gain. The IRS treats that as taxable income, 1099-K or no 1099-K. Same goes for collectibles, sneakers, trading cards, and anything else you bought low and sold high.
Side Hustle & Resale Income
If you regularly buy items to resell, run an Etsy shop, do gig work, or sell handmade goods, that is business income. Every dollar of profit is taxable, and you may also owe self employment tax on top of regular income tax. The 1099-K threshold has zero effect on this part of the rules.
You Might Still Get a 1099-K Anyway
Even though the federal threshold is now $20,000 and 200 transactions, payment platforms can choose to send you a 1099-K below that line. Some do this just to keep their own records clean. So if you receive one even though you only made $4,000 across 60 transactions, do not panic. Just report the income correctly and keep your records.
There is also the matter of credit card processors and merchant acquiring entities, which have a separate rule. Anyone who runs a business and accepts a credit or debit card payment, even one of any amount, can receive a 1099-K from their card processor. That part of the rules did not change.
Quick Tips for South Carolina Sellers Going Into 2026
Track everything yourself, even if you do not expect a form. A simple spreadsheet showing item, date, sale price, and original cost is enough to back up your numbers if the IRS ever asks.
Separate personal from business activity inside your payment apps. Most platforms now let you mark personal transfers separately from business sales, and using that feature helps avoid confusion later.
Keep receipts for what you originally paid for items you resell. The cost basis is what reduces your taxable gain, and without proof of the original price, the IRS can treat the entire sale as profit.
If your side hustle income is climbing, talk with a tax preparer in South Carolina before tax season hits. The 1099-K rules are now simpler, but the income tax rules around side income are exactly the same. A few hours of planning in November can save real money in April.
The 2026 update brings welcome breathing room for casual sellers. Just remember, the form is paperwork, and the tax obligation lives separately. Treat them that way and you will sleep fine.