The American Institute of Certified Public Accountants (AICPA) has released its 2025 tax priorities in a letter to congressional finance leaders, spotlighting a significant proposal to increase the Form 1099-K reporting threshold from $600 to $10,000. This change, aimed at easing the tax compliance burden, comes alongside other key recommendations like permanent tax relief for natural disaster victims and the extension of certain Tax Cuts and Jobs Act (TCJA) provisions.
A Closer Look at the Form 1099-K Threshold
Form 1099-K reports payments for goods or services processed through third-party platforms like PayPal or Venmo. The $600 threshold, enacted under the American Rescue Plan Act (ARPA) of 2021, replaced a higher de minimis exception of $20,000 and 200 transactions. Its implementation has been delayed, with the IRS setting transitional thresholds of $5,000 for 2024 and $2,500 for 2025.
Without legislative action, it will drop to $600 in 2026, potentially flooding the IRS with an estimated 44 million forms—over three times the 14 million received in 2023.
Key impacts of the proposed threshold increase:
- Reduced paperwork for small businesses and gig economy workers
- Decreased administrative burden for payment platforms
- Simplified tax season for CPAs and tax preparers
- Potential resource savings for the IRS, allowing focus on higher-value compliance issues
- Greater clarity for casual sellers and part-time entrepreneurs
The AICPA argues that raising the threshold to $10,000 would reduce confusion and administrative strain for small businesses and individuals. A higher threshold means fewer taxpayers would need to file these forms, simplifying reporting for those using payment apps for side hustles or small sales.
Relief for Natural Disasters and TCJA Extensions
Beyond Form 1099-K, the AICPA is pushing for permanent tax relief for those impacted by natural disasters. Proposals like the Filing Relief for Natural Disasters Act (H.R. 517/S. 132) aim to provide consistent support, helping businesses recover without added tax complexity.
The AICPA also supports extending TCJA provisions set to expire, such as Section 174 expensing for research and development costs and the qualified business income (QBI) deduction. These extensions would preserve tax benefits that spur innovation and growth.
Simplifying the Tax Code
In its 2025 Compendium of Tax Legislative Proposals, the AICPA offers 69 simplification and technical fixes to the tax code. These range from preserving the cash method of accounting to expanding 529 plan uses for workforce credentials.
“Our tax legislation priorities reduce uncertainty and complexity for taxpayers,” said Melanie Lauridsen, AICPA’s Vice President of Tax Policy & Advocacy.
For CPAs and their clients, these changes could streamline compliance while providing valuable planning opportunities in the year ahead.
How Virtue CPAs Can Support You
At Virtue CPAs, we recognize the challenges these evolving tax priorities present. Since 2016, our team of professional accountants and tax experts has helped small and midsized businesses across the U.S. navigate complex tax landscapes. Whether it’s managing Form 1099-K compliance, advising on disaster relief provisions, or leveraging TCJA deductions, we offer customized solutions to keep your business compliant and thriving.
Take Action Today
With tax laws in flux, staying ahead is critical. Virtue CPAs is here to bring clarity and confidence to your financial operations. Contact us today to explore how our customized accounting and tax services can address these changes and support your business goals. Let us handle the complexities so you can focus on what matters most growing your business.