If you sell a points balance and get paid through a platform like PayPal, you might receive a Form 1099-K. For 2026 the rules around that form changed, and the change is in sellers' favor. The reporting threshold went back up.
Here is the current state of it, what the form actually does, and why most one-off sellers will never see one.
The 2026 federal threshold
Section 70432 of the One Big Beautiful Bill Act restored the 1099-K reporting threshold to its pre-2021 level: more than $20,000 in gross payments and more than 200 transactions in a year. Both conditions, not either one. The IRS confirmed this in its FAQ on the change, and it applies retroactively.
This undoes a few confusing years. The American Rescue Plan Act of 2021 had dropped the threshold to $600 with no transaction minimum, and the IRS then delayed and phased that in ($5,000, then $2,500). The Bill scrapped the phase-in. So the $600 and $2,500 figures you may have read about for payment apps no longer apply at the federal level.
What a 1099-K is, and what it is not
A 1099-K is an information return. A third-party payment platform files it to tell the IRS how much it routed to you. That is all it does. It is not a bill, and receiving one does not by itself mean you owe tax. The IRS guidance on the form is explicit that the amount on it is gross, before any fees or adjustments, and that you reconcile it on your return.
So the form is a heads-up to both you and the IRS, nothing more. What you actually owe depends on the underlying transaction, which is a separate analysis covered in the related guides.
Will selling points trigger a 1099-K?
For most people, no. To get one at the federal level you would need to cross both bars in a single year with a single platform: over $20,000 received and over 200 separate transactions. A one-time sale of a points balance does neither. You would have to be selling constantly, in volume, through the same payment app, to land there.
Payment method matters too. The 1099-K applies to third-party settlement organizations (the PayPals and payment apps of the world). A bank wire or other direct payment is not a 1099-K transaction, though it can be reportable through other means. If a payout arrangement could generate a different form, that belongs to the 1099-MISC discussion linked below.
States that set the bar lower
The federal number is not the whole story. Several states run their own 1099-K rules with thresholds well below the federal one, and a few have historically required reporting at $600 regardless of what Washington does. Massachusetts and Vermont are the usual examples. So a resident of a low-threshold state can receive a state 1099-K on an amount that would never trigger the federal form.
State rules also shift, and they did not all move in lockstep with the federal change. If you live somewhere with its own threshold, check your state's current guidance rather than assuming the $20,000 figure covers you. The dedicated state-tax guide in the related links goes deeper.
If you do receive a form
Do not ignore it. The IRS has its copy, so the number needs to appear and be reconciled on your return even if part or all of it is not taxable. Keep your own record of what you sold, what you were paid, and any fees, so the gross figure on the form can be squared with reality. And if the amount is meaningful, get a tax professional to handle the reporting. The form is routine. Mishandling it is the part that causes headaches.