Reselling Taxes: What Every Seller Needs to Know in 2026

Taxes on reselling income confuse a lot of sellers. Between changing 1099-K rules and questions about what's actually taxable, it's easy to feel lost. Here's what you need to know for 2026.

The 1099-K Situation in 2026

There's been a lot of confusion about 1099-K reporting thresholds. Here's where things stand:

The One Big Beautiful Bill Act restored the original threshold: you'll receive a 1099-K only if you have both:

• Over $20,000 in gross payments, AND
• More than 200 transactions

The previously planned $600 threshold is no longer happening. If you're under these limits, you won't receive a 1099-K from platforms like eBay, Poshmark, or PayPal.

What's Actually Taxable?

Here's what matters for your taxes:

Selling Personal Items at a Loss

If you sell personal items for less than you paid, there's no taxable income. Sold your old jacket for $30 when you paid $100? No tax owed. However, you can't deduct personal losses either.

Selling at a Profit

Profit is taxable - whether it's a one-time sale or regular business. Bought an item for $20, sold for $100? That $80 profit is taxable income.

Running a Reselling Business

If you regularly buy items to resell for profit, the IRS considers this a business. All your profits are taxable as self-employment income.

Business vs Hobby

The IRS distinguishes between businesses and hobbies. This matters for what you can deduct.

Signs It's a Business

• You operate with the intent to make a profit
• You dedicate regular time and effort
• You keep business records
• You've made a profit in at least 3 of the last 5 years
• You depend on the income for livelihood

Why It Matters

Business losses can offset other income. Hobby losses cannot. If your reselling is truly a business, you can deduct expenses even if they exceed your revenue (creating a loss).

Deductions for Resellers

If reselling is your business, you can deduct legitimate expenses:

Cost of Goods Sold

• What you paid for inventory
• Shipping costs to receive inventory
• Supplies for cleaning or repairing items

Platform and Transaction Fees

• eBay, Etsy, Poshmark selling fees
• PayPal/payment processing fees
• Monthly subscription fees for selling tools

Shipping Supplies and Costs

• Boxes, mailers, tape, tissue paper
• Postage (unless you charge buyers separately)
• Scale, label printer, printer ink

Business Expenses

• Home office deduction (if you have dedicated space)
• Storage costs
• Mileage to thrift stores, post office, sourcing trips
• Photography equipment
• Cross-listing software subscriptions

Keeping Records

Good records make tax time easier and protect you in an audit.

• Track what you paid for each item (receipts, bank statements)
• Save records of all sales
• Keep receipts for business expenses
• Log mileage for business-related driving
• Use accounting software or spreadsheets to track everything

Many sellers use a simple spreadsheet: Item, Cost, Sale Price, Fees, Profit, Date. This single document can save hours at tax time.

Self-Employment Tax

If your net self-employment income exceeds $400, you owe self-employment tax (Social Security and Medicare). This is in addition to regular income tax.

Self-employment tax rate: 15.3% (12.4% Social Security + 2.9% Medicare). You can deduct half of this on your income taxes.

Quarterly Estimated Taxes

Unlike W-2 employees, no one withholds taxes from your reselling income. If you expect to owe $1,000 or more in taxes, you should pay quarterly estimated taxes.

Due dates: April 15, June 15, September 15, January 15 (of the following year). Use IRS Form 1040-ES to calculate and pay.

State Sales Tax

This is separate from income tax. Whether you need to collect sales tax depends on:

• Your state's laws
• Where your buyers are located
• The platforms you use (many handle this automatically)

Most major marketplaces (eBay, Etsy, Poshmark, Amazon) now collect and remit sales tax on your behalf for states that require it. Check your platform's policies.

Common Tax Mistakes Resellers Make

• Ignoring income because they didn't get a 1099-K
• Not keeping records of purchase costs (can't prove your profit margin)
• Missing deductions they're entitled to
• Mixing personal and business finances
• Not paying quarterly estimates and getting hit with penalties
• Claiming hobby expenses when the IRS says it's a business (or vice versa)

When to Get Professional Help

Consider a tax professional if:

• Your reselling income is significant (varies, but $10,000+ profit is a reasonable threshold)
• You're unsure if you're a business or hobby
• You have complex situations (multiple states, international sales)
• You want to maximize deductions legally
• You're selected for an audit

A good accountant familiar with small business and reselling can save you more than they cost.

Summary

The 1099-K threshold is $20,000 AND 200+ transactions for 2026. But all profit is taxable regardless of whether you receive a form. If reselling is your business, you can deduct expenses against that income.

Keep good records from day one. Track what you pay, what you sell for, and all your expenses. Come tax time, you'll be glad you did.