eBay Sales: How Much You Can Make Before You Owe Taxes

Some people sell on eBay as a full-time career, while others treat it as a side hustle, hobby, or a way to declutter or downsize. You may wonder how much you can sell on eBay before you're required to pay taxes, which this article directly addresses in detail.

Once your net earnings from self-employment income are $400 or more, you must file an income tax return. If your sales hit a certain threshold in 2025, eBay is also obligated to send you IRS Form 1099-K, which shows your earnings from the platform for the year.

Use this article to examine your tax responsibilities related to your eBay selling activities. You'll learn about income thresholds that may trigger the need to report your income, essential tax forms you'll need to prepare and file with the IRS, when to submit your business taxes, and strategies to reduce your taxable income.  

How Much Can I Sell on eBay Without Paying Taxes?

Whether you're a part-time eBay seller or it's your main line of work, you must report income by preparing and filing an income tax return if your net earnings from eBay sales and other sources are $400 or more. Self-employed individuals will have tax responsibilities that very casual users and hobbyists do not.

If you rarely sell personal items on eBay for a loss to downsize or declutter your surroundings two or three times per year, you don't need to report that income to the IRS. However, if you sell more than a few items on eBay per year but don't operate as a business, these activities are typically considered a hobby for tax purposes. Determining the line between a business and a hobby can be challenging, but the IRS has offered several factors to help you make that determination, including:

• Whether you carry on your eBay activities in a businesslike manner and maintain complete and accurate books and records

• Whether you have personal motives for selling on eBay

• Whether the time and effort you put into selling on eBay indicates you intend to make it profitable

• Whether you depend on eBay income for your livelihood

• Whether your losses from selling secondhand items are due to circumstances beyond your control

• Whether you or your advisors have the knowledge necessary to conduct eBay sales as a successful business

• Whether you were successful in making a profit in similar activities in the past

• Whether eBay selling makes a profit in some years and how much profit it makes

• Whether you can expect to make a future profit from the appreciation of the assets used while selling on eBay

If you've determined that you are operating as a hobby on eBay, you will owe state and federal taxes on any income you've received. However, you will not be considered a business, which exempts you from claiming tax deductions and being responsible for associated taxes, including the self-employment tax. eBay hobbyist sellers typically use IRS Form 1040, Schedule 1, to report their income.

Getting Form 1099-K from eBay

IRS Form 1099-K reports payments for goods or services from:

• Credit, debit, or stored value cards (gift and other payment cards)

• Payment apps or online marketplaces like eBay, also called third-party settlement organizations (TPSOs)

If your sales hit the payment threshold, eBay must prepare and send 1099-K copies to the IRS and to you by January 31 of the following year.IRS 1099-K payment reporting thresholds by year: 

• $5,000 in 2024

• $2,500 in 2025

• $600 in 2026

You can download an electronic copy of your 1099-K via your eBay account in the Seller Hub and My eBay or request a physical copy from the platform to be mailed to your state, including California, Washington, and New York. 

When Should I Pay eBay Taxes?

Self-employed eBay sellers will use IRS Form 1099-K and other relevant forms and documents as supporting materials to prepare and file their personal returns by tax day, April 15. Forms you may use to file your taxes and claim tax deductions include:

IRS Form 1040

Individual taxpayers file IRS Form 1040, U.S. Individual Income Tax Return. Form 1040 calculates your federal taxable income and tax liability. You should also file schedules to report your self-employed income: Form 1040 Schedules C and SE.

Form 1040, Schedule C

Unless you elect to form as a different business entity, self-employed individuals represent sole proprietors for federal income tax purposes. To report business income and expenses, you should file IRS Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). Schedule C calculates your business income or loss from self-employment.

Form 1040, Schedule SE

You must also pay the 15.3% self-employment tax on your self-employed income. Sole proprietors must calculate self-employment tax liability using IRS Schedule SE (Form 1040), Self-Employment Tax. You can claim half of what you paid in self-employment taxes as a deduction.  

Quarterly Estimated Taxes

Self-employed individuals must also estimate and pay quarterly estimated taxes throughout the year. Quarterly estimated tax payment due dates for the 2025 tax year include the following: 

• April 15

• June 16

• September 15

• January 15, 2026

Form 1040, Schedule ES

Use IRS Form 1040-ES, Estimated Taxes for Individuals, to calculate and pay your quarterly estimated taxes. The form includes tax information such as payment vouchers and instructions for filing online.

eBay Tax Deductions

Unlike casual eBay sellers or hobbyists, self-employed sellers can benefit from eligible tax deductions. Tax deductions will reduce your tax liability by lowering your total taxable income. The business expense must be ordinary (common and accepted for eBay sellers) and necessary (helpful and appropriate for eBay sellers) to qualify for a tax deduction.

Consider taking the following tax deductions for your eBay business expenses, including:

• Shipping costs

• Office supplies

• Cost of inventory

• Marketing and advertising 

• eBay fees

• Home office

• Professional legal and accounting services

It's essential to keep detailed records supporting each deduction you take. Identifying every tax deduction your eBay business is eligible for can be difficult. If you're struggling with issues surrounding deductions, local tax, net income, gross income, gross sales, capital gains, cost of goods, sales tax, applicable tax laws, and other tax issues impacting your operations, 1-800Accountant's year-round tax advisory solution will help. 

Avoid IRS Stress: Expert Bookkeeping and Tax Filing Services for You

Balancing your eBay responsibilities as you manage your taxes throughout the year can be challenging for even the most experienced e-commerce sellers. If managing your small business self-employed taxes stresses your operations, consider trusting the CPAs and tax professionals at 1-800Accountant, the leading virtual accounting firm for American small businesses, to address your distinct accounting and financial requirements.

Save time and achieve your annual financial goals with our suite of affordable, tax-deductible financial services. Schedule a quick consultation–usually 30 minutes or less—to learn how bookkeeping and business tax preparation will help your eBay business maintain full IRS compliance with maximum tax savings.