How Much Can You Sell on eBay Before You Have to Claim Taxes?

If you are an eBay seller, you may naturally be wondering how much you can earn before reporting the sales to the IRS. The latest tax regulations have changed the reporting threshold. It became essential for sellers—whether casual or business—to acknowledge the surrounding taxation liabilities.

The Reporting Threshold for eBay Sales

As a platform, eBay is required to issue Form 1099-K to sellers who generated more than a certain threshold. Under updated IRS rules, this threshold has a lowering trend. The mentioned threshold is $5000 for 2024 and $2500 for 2025. It is planned to be reduced to $600 for 2026.

• If the individual receives a certain amount or more in payments on eBay during the year, the platform will issue a Form 1099-K.
• This form is also reported to the IRS. In other words, the income should be included in the tax return.

It should be acknowledged that individuals still have responsibility for reporting all taxable eBay income even if they do not receive 1099-K.

How to Lower Your eBay Tax Bill

If the eBay sales qualify as a business, the taxable income can be offset by deducting eBay business expenses write-offs:

• eBay seller fees (listing fees, final value fees)
• Shipping & packaging costs (postage, labels, boxes)
• Cost of Goods Sold (COGS) (what originally was paid for inventory)
• Home office expenses (if part of the home is used for business focus)
• Marketing & advertising expenses (e.g., social media ads for the eBay store)

What Happens If You Don’t Report eBay Income?

Not reporting taxable eBay earnings can result in:

• IRS penalty amounts for underreporting income
• Interest charges on unpaid taxes
• Potential audits, especially if eBay has already reported the earnings to the tax authority

Since eBay automatically reports earnings over a certain threshold, the IRS will have a record of the sales. Red flags would likely rise in the case income is missing from the tax return.

Final Thoughts

If more than a certain threshold is sold on eBay, a 1099-K form should be expected to be received and all the income should be reported (unless personal items were sold at a loss). For eBay sellers running a business, tracking eBay seller tax deductions can present assistance in reducing taxation liabilities. Surrounding obligations should be recognized to prevent surprises and establish full compliance.