The IRS Just Made a Move That Could Change How Every…

The IRS Just Made a Move That Could Change How Every Gig Worker Gets Paid

gig worker changes in how you get paid because of IRS rule change — Image Source: Shutterstock

Gig workers around the country just got a major win. The IRS just rolled back one of the most controversial tax rules affecting gig workers. This will change how millions of freelancers, side hustlers, and self-employed individuals get paid. Under the newly signed One Big Beautiful Bill Act, the IRS has reversed the $600 reporting threshold for Form 1099-K, restoring the previous standard of $20,000 in payments and 200 transactions per year. Learn what this means for your tax season and how your tax documents may be affected.

What Changed

Originally introduced in the American Rescue Plan Act of 2021, the $600 threshold required third-party payment platforms like PayPal, Venmo, and Etsy to issue 1099-K forms for anyone earning over $600 annually. Critics argued it would overwhelm casual sellers and gig workers with paperwork and confusion. Now, the IRS has officially reinstated the old threshold: $20,000 in gross payments and at least 200 transactions per year. So, in essence, the $600 rule never really took effect. It kept getting pushed back, and now it has been rolled back altogether.

Why It Matters

This rollback means fewer gig workers will receive 1099-K forms, and fewer will be flagged for income they may not have realized was taxable. For part-time freelancers, online sellers, and those using payment apps for side gigs, this change reduces the risk of surprise tax bills and reporting errors. It also simplifies tax prep for millions of Americans who earn modest income outside traditional employment. Of course, if you have questions about taxable income, you should consult a tax professional. Self-employment taxes can still be tricky, even with the old rule in effect.

Who Benefits Most

So, who will benefit from this rollback? Casual sellers on platforms like eBay, Etsy, and Facebook Marketplace are poised to benefit the most. Additionally, freelancers who use third-party payment platforms like PayPal or Stripe may not get a 1099-K for their income. The same is true for rideshare or delivery drivers. Ultimately, if you have a side hustle with multiple income streams, you may not have to deal with as many tax forms, unless you meet the higher threshold. This can reduce confusion and potential audits.

What Gig Workers Still Need to Know

While the reporting threshold has changed, remember that all income is still taxable. Gig workers must continue tracking earnings and expenses, even if they don’t receive a 1099-K. The IRS expects all income to be reported, regardless of whether a form is issued. That means good recordkeeping is still essential.

Other Tax Perks in the New Law

This is not the only benefit of The One Big Beautiful Bill Act. It also includes a permanent qualified business income deduction. The deduction lets freelancers and self-employed workers deduct up to 20 percent of qualified income. There’s also a new deduction for tip income, a higher standard deduction, and penalty relief for tip and overtime reporting. These changes aim to simplify tax filing and reduce the burden on self-employed individuals.

A Win for Simplicity—But Stay Vigilant

This IRS move is a win for gig workers who feared drowning in paperwork. But it’s not a free pass. Income still counts, and the IRS is watching. Use this opportunity to streamline your records, understand your obligations, and take advantage of new deductions. The gig economy isn’t going anywhere, and now, it’s a little easier to navigate.

Are you a gig worker affected by the 1099-K rollback? Share your experience or questions in the comments.