President Trump signed off on a tax reform that wipes out the $600 IRS reporting rule for payment apps. The rollback applies to CashApp, Venmo, PayPal, Airbnb, Etsy, and other platforms that process peer-to-peer payments. Starting with the 2025 tax year, users will only receive Form 1099-K if they cross both $20,000 in gross payments and 200 transactions. That threshold was the standard before Democrats lowered it in 2021. The change is part of the GOP’s One Big Beautiful Bill, which passed earlier this month.
The $600 rule never fully landed. It was introduced under the American Rescue Plan Act in 2021 but delayed twice due to backlash. The IRS tried to phase it in slowly. In 2024, the threshold was $5,000. In 2025, it was set to drop to $2,500. By 2026, it would have hit $600. That timeline is now dead. The original $20K/200 rule is back in place permanently.
Platforms are already adjusting. PayPal, Venmo, and Etsy confirmed they will not issue 1099-Ks unless users cross the reinstated threshold. Airbnb and eBay joined the Coalition for 1099-K Fairness, which lobbied for the rollback. The group warned that the $600 rule would flood casual users with tax forms and confuse millions of transactions. The IRS agreed. It faced a projected surge of 30 million new filings per year. That paperwork spike is now avoided.
Treasury Secretary Scott Bessent called the rollback “a win for deregulation.” He said the IRS should focus on real business income, not used couch sales. Rep. Carol Miller of West Virginia said the rule “threatened small sellers and gig workers with unnecessary scrutiny.” The IRS confirmed that casual payments for splitting bills or selling personal items at a loss will no longer trigger automatic reporting.
The rule change does not erase tax obligations. Income is still taxable. But users who sell used items or casually flip furniture won’t get flagged unless they cross the threshold. The IRS says users must still report income manually if it qualifies. The absence of a 1099-K does not mean immunity. It means less noise.
Platforms are updating their systems. PayPal and Venmo are reconfiguring algorithms to separate business from personal payments. Etsy and Airbnb are revising their seller dashboards. The IRS says it will monitor compliance but expects fewer errors and less confusion.
https://brammerandyeend.com/how-the-irs-is-cracking-down-on-venmo-paypal-and-cashapp-in-2025/
https://www.kiplinger.com/taxes/irs-form-1099-k-600-dollar-reporting-threshold
