The IRS is making big changes in how side income and gig work are reported for the 2026 tax season. With millions of Americans driving for Uber, delivering with DoorDash, selling on Etsy, or freelancing online, these updates are going to affect a lot of people. The goal is simple, make sure all taxable income is properly reported and taxed. If you earn extra money outside a regular paycheck, here’s what you need to know before filing your 2026 taxes.
A Lower Threshold for 1099-K Forms
In the past, most gig workers never saw a 1099-K form unless they made over $20,000 and had more than 200 transactions in a year. That meant many smaller side hustles went unreported. Starting in 2026, the bar is much lower. If you receive $5,000 or more through PayPal, Venmo, Cash App, or gig platforms like Uber and Lyft, you’ll get a 1099-K. The IRS will also receive a copy, so skipping this income on your return will be harder than ever.
This rule applies to gig drivers, freelancers, online sellers, and anyone who accepts payments through third-party apps for business purposes. More people than ever before will now fall under IRS reporting requirements.
What Income You Must Report
The IRS considers almost all money earned from work or sales as taxable income. That includes pay from freelance projects, delivery apps, digital tips, and profits from online product sales. Even if you’re doing a hobby that turns into a side business, the income is taxable. Not all transfers are taxable, though. Sending money to friends, receiving personal gifts, or selling used items at a loss don’t count. The key is whether you’re making a profit or being paid for services. If so, you need to report it.
Don’t Forget About Self-Employment Taxes
Earning more than $400 from freelance or gig work means you must file a tax return. On top of regular income tax, you’ll also owe self-employment tax, which covers Social Security and Medicare. The rate for 2026 remains 15.3 percent. That may come as a shock to people who are used to traditional jobs where taxes are taken out of every paycheck. Gig workers are responsible for setting money aside themselves, and many are surprised by how much they owe come April.
How Freelancers Can Save with Deductions
The good news is that freelancers and gig workers can lower their tax bills with deductions. If you use your car for ridesharing, part of your mileage or gas expenses can be written off. A home office used only for work may qualify too. Subscriptions, software, supplies, and even part of your phone or internet bill can also be deducted. The IRS stresses the importance of keeping receipts and accurate records. Without them, deductions may not hold up if questioned. Organized record-keeping is one of the best ways to save money when filing.
Paying Taxes Quarterly Instead of All at Once
Since gig platforms don’t withhold taxes like a regular employer, you may need to make estimated tax payments four times a year. The IRS requires these quarterly payments if you’ll owe more than $1,000 in taxes for the year. These deadlines usually fall in April, June, September, and January. Many freelancers make it easier by setting aside around 25 percent of each payment they receive. Paying regularly can help you avoid penalties and a huge bill at tax time.
Why These Changes Matter in 2026
Lowering the 1099-K threshold to $5,000 will put millions of gig workers and online sellers on the IRS’s radar. It doesn’t change the fact that income was always taxable, but it does make enforcement tighter. People who never received a tax form in the past will now get one, and failing to report could bring penalties.
For anyone earning side income, the bottom line is this, treat gig work like a real business. Keep records, set aside tax money, and know your filing responsibilities. The IRS is making gig income more transparent, and ignoring these changes could cost you.