Where the "$600" myth comes from
In 2021, the American Rescue Plan Act lowered the threshold at which payment platforms (PayPal, Venmo, Etsy, Uber, DoorDash) must send a Form 1099-K — from $20,000 down to just $600. Overnight, millions of casual sellers and gig workers feared a flood of tax forms, and "$600" became shorthand for "the amount where taxes start."
It was never that. A 1099-K is an information form — it tells you and the IRS how much a platform paid you. It has nothing to do with whether the income is taxable. The IRS delayed the $600 rule three years running, and then in July 2025 the One Big Beautiful Bill Act repealed it entirely, restoring the old $20,000-and-200-transactions threshold, retroactive to 2022.
So the $600 rule never actually took effect — and it's gone now. But the tax obligation it got tangled up with never depended on it in the first place.
The 1099-K threshold for 2026
Here's how the federal threshold for receiving the form has actually played out:
| Tax year | Federal 1099-K threshold |
|---|---|
| 2021 & earlier | $20,000 in payments + 200 transactions |
| 2022–2024 | $20,000 + 200 (IRS delayed the $600 rule) |
| 2025 & 2026 (current) | $20,000 + 200 transactions |
Two catches: (1) A handful of states set their own lower 1099-K thresholds, so you may still get a form even under $20,000. (2) Getting — or not getting — a form changes nothing about what you owe. The threshold only decides whether a copy lands in your mailbox.
When you actually owe tax
Your tax bill is driven by your net profit (what you earned minus legitimate business expenses), not by any reporting form. Two separate thresholds matter:
- Self-employment tax (15.3%): owed once your net self-employment profit exceeds $400 in a year. This is the one that catches people under $600.
- Federal income tax: owed when your total income (job + side hustle + everything) exceeds your standard deduction. Even $200 of side income can be taxed if you already have other income filling up the bracket.
Net profit is the key word. If you earned $550 reselling sneakers but spent $300 on inventory and shipping, your net profit is $250 — below the $400 line, so no self-employment tax (though you should still report it). Earn $550 with no expenses, and you're over $400 — you owe.
I didn't get a 1099 — does the IRS know?
Maybe, maybe not — but it doesn't change your obligation. The IRS does not need a 1099 to assess tax on income you failed to report. Banks report large deposits, platforms hand over data, and an audit of one year can surface unreported income from several. "No form" is not the same as "invisible."
Report it regardless. If you earned $500 from a side gig and received no forms, you still report it (on Schedule C for most side hustles). If you don't, and the IRS later matches records, you'll get a notice for the tax plus penalties and interest — far more than the tax would have been.
What to do if you earned under $600
- Report all income on your federal return — on Schedule C for self-employment income — whether or not a 1099 arrived.
- Deduct legitimate expenses (supplies, fees, mileage, software, home office). These lower your net profit and may keep you under the $400 self-employment-tax line.
- Track from day one — a simple monthly spreadsheet is plenty at low income. You can't deduct what you didn't record.
- Don't assume you're under the line — calculate actual net profit before deciding you owe nothing.
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Get my free tax check →Frequently asked questions
Do I have to report side hustle income under $600?
Yes. All income from a side hustle must be reported on your tax return regardless of whether you receive a 1099. The $600 figure was only ever a reporting threshold for the platforms paying you — not a tax exemption for you. There is no income amount too small to report.
Is $600 the amount where you start paying taxes?
No. $600 was never the point at which tax was owed. It was a proposed 1099-K reporting threshold — and it was repealed by the One Big Beautiful Bill Act in 2025 before it ever fully took effect. Self-employment tax actually starts once your net profit exceeds $400 in a year.
What is the 1099-K threshold for 2026?
For the 2025 and 2026 tax years, the federal 1099-K threshold is back to $20,000 in payments AND more than 200 transactions. The One Big Beautiful Bill Act (2025) repealed the lower $600 rule and restored the old threshold, retroactive to 2022. Some states still set their own lower thresholds.
Will the IRS know about my income if I don't get a 1099?
Possibly. Even without a 1099, payment platforms and banks can report data, and an audit can surface deposits. The IRS does not need a 1099 to assess tax on income you failed to report. The safe approach is to report all income regardless of forms received.
What happens if I don't report income under $600?
If the IRS later identifies unreported income, you'll owe the tax plus a failure-to-report penalty (typically 20% of the understatement) plus interest that compounds the longer it goes unpaid. Reporting small amounts up front is far cheaper than a notice years later.
"$600" was a reporting threshold that got mistaken for a tax rule — and it's now repealed. What actually matters hasn't changed: net self-employment profit over $400 is taxable, forms or no forms. Track your income and expenses from the start, report what you earn, and the threshold question takes care of itself.
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