WASHINGTON, D.C. — New changes to tax regulations mean that more users of popular payment apps like PayPal and Venmo could be required to report their income to the IRS. For the 2025 tax year, the IRS has lowered the reporting threshold for commercial transactions to $2,500, down from $5,000 in 2024. This change means that users who receive more than $2,500 for goods and services, regardless of the number of transactions, will receive a Form 1099-K.
The threshold is scheduled to drop even further to $600 for the 2026 tax year. According to the IRS, this change is designed to ensure that small businesses and individual sellers accurately report their income.
State and Other Considerations
Some states already have lower thresholds for issuing 1099-K forms. Maryland, Massachusetts, Vermont, and Virginia have a $600 threshold, while Illinois’s is $1,000 for four or more transactions.
In a related development, PayPal recently launched a new feature called “Pay with Crypto,” which allows merchants to accept over 100 different cryptocurrencies. This new service is touted to reduce transaction fees for businesses by up to 90%.
