You generally only owe taxes on eBay sales if you make a profit (selling for more than the original purchase price). Occasional sales of used personal items at a loss (like a virtual yard sale) are usually not taxable. However, if you sell regularly or for profit, that income is taxable, and you must report it to the IRS.
You must report any profit from eBay sales as taxable income, regardless of the amount, but for tax year 2025 and beyond, eBay sends a Form 1099-K to sellers who have over $20,000 in gross payments from more than 200 transactions, a return to the old threshold, making detailed record-keeping crucial for tracking profits and expenses for all sales, whether you get a form or not.
Profit: This is when you sell something for more than you paid for it. If you purchased an item for $150 and sold it for $450, and you had $50 in fees, your profit is $250. That $250 is considered your net profit. Any net profit (gross profit minus any expenses) is subject to federal, state, and local income taxes.
Yes, you must report all eBay income, even under $20,000, if you're selling for profit (as a business or hobby), but you only receive a Form 1099-K from eBay if you hit both the $20,000 gross payments and 200+ transaction thresholds for the 2025 tax year (filing in 2026), thanks to recent law changes that reverted the rule. The key is that the 1099-K is an information form, not the tax rule itself; you are responsible for reporting all taxable income from sales.
Not all sales are taxed. Occasional sales of second-hand items do not necessitate reporting, especially when such items are sold for less than the original purchase price. However, if selling on eBay is done regularly for profit, the IRS considers it a business. So, income should be reported.
If you sell over $600 on eBay, you must report the profit as taxable income, even if you don't receive a Form 1099-K (which currently requires $20k/200 transactions federally for 2025+), because some states have lower thresholds, and you're responsible for taxes on profits. You'll likely get a 1099-K in certain states (like MA, VT) at $600, which reports gross sales to the IRS and you file on Schedule C, deducting expenses like fees, shipping, and inventory costs to find your taxable profit.
As a UK resident, when you sell over £1,707 or more or complete 30 or more sales transactions within a calendar year, eBay is obliged to report certain personal or business information to HMRC in accordance with the UK digital sales reporting legislation. eBay will notify you when you have crossed these thresholds.
If you made a profit or gain on the sale of a personal item, your profit is taxable. The profit is the difference between the amount you received for selling the item and the amount you originally paid for the item.
2025 and later years Form 1099-K thresholds
The One Big Beautiful Bill Act (OBBA) reverted the 1099-K reporting thresholds to the previous $20,000 in payments and a 200 transaction minimum. The lower $2,500 and $600 thresholds are no longer in effect for 2025 and 2026.
The federal self-employment tax is 15.3%, so you could save money if your income from an activity or pastime qualifies as hobby income. And if your activity generates less than $400 in 2025, you don't need to pay self-employment taxes, even if your income doesn't qualify as hobby income.
This is a very popular misconception - the reality is that any online or offline selling activity in which the main motive is to make a profit is deemed by the IRS to be a business - this applies no matter how much you are making in revenue.
Getting Form 1099-K from eBay
If your sales hit the payment threshold, eBay must prepare and send 1099-K copies to the IRS and to you by January 31 of the following year. IRS 1099-K payment reporting thresholds by year: $5,000 in 2024. $2,500 in 2025.
If you purchase an item for personal use and later sell it for less than you paid for it then you do not owe taxes on the sale. Nor do you have a loss you can deduct against other income. You may still be required to report the sale on your tax return.
Use your business account for business purposes and your personal account to receive payments for personal transactions. Otherwise, personal payments will end up on your business's Form 1099-K, and you or your tax professional will then have to sort out personal and business payments when preparing your tax return.
Selling limits are designed to help you grow your business in a manageable way and ensure you can give your buyers great service. As you get more comfortable meeting buyer demand, we'll increase your limit.
When you can ask eBay to step in. Once the buyer has let you know that they have an issue, you have 3 business days to respond with a resolution. After that, if the matter hasn't been resolved, either of you can ask us to step in and help.
Effective February 2025, ebay will hold private sellers funds for 14 days if the order is posted with an un-tracked delivery service (such as Royal Mail 2nd Class).
Your transactions are online which means that they are completely trackable. And HMRC can access your selling records from eBay. So if you do go over £1,000, you're legally required to declare them!
The "20k rule" refers to the traditional IRS threshold for reporting income from payment apps and online marketplaces on Form 1099-K: over $20,000 in gross payments AND more than 200 transactions in a calendar year. While a law (the American Rescue Plan) temporarily lowered the threshold to $600, recent legislation, the One Big Beautiful Bill Act (OBBBA) (OBBBA), has reinstated the $20,000/200-transaction rule for tax years starting in 2025, providing relief for casual sellers and gig workers.
According to eBay selling limits, new eBay accounts can sell up to 10 items or $500 total per month. Limits consider both listings and stock.