Reseller TaxesUS tax basics for people who sell online

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Reseller tax basics: what's taxable and what isn't

6 min read

You pay tax on reselling profit, not on sales, and you owe it whether or not a marketplace sends you a form, which for 2025 and 2026 happens only above $20,000 and 200 transactions. Selling your own used things for less than you paid is different: there's no gain to tax.

Do you have to pay taxes on reselling income?

Yes, on the profit. If you buy things to resell, the IRS treats the profit as income you must report, with or without a Form 1099-K (IRS, Understanding your Form 1099-K, reviewed June 28, 2026). Profit is what buyers paid, minus refunds, the cost of the items that sold, marketplace fees, postage and your other business costs.

Gross sales − refunds − cost of goods sold − business expenses = net profit. Net profit is the number the tax rules care about.

Someone who sells $30,000 of goods in a year hasn't earned $30,000. Part of it paid for the inventory. Part went to the marketplace in fees and part went to the post office. A 1099-K shows the gross. Your return shows the profit.

Do you owe tax if no 1099-K arrives?

Yes, if you made a profit. A Form 1099-K is paperwork a platform files, and its threshold only decides when the platform has to send one: for 2025 and 2026, over $20,000 in payments and over 200 transactions. The IRS says you must report income from goods you sell whether or not you receive a 1099-K.

The threshold has moved several times since 2021. The 1099-K threshold, year by year has each change and the document behind it.

Do you pay taxes on selling personal items?

Usually not. Selling something you owned for personal use, like clothes or furniture, for less than you paid isn't taxable, because there's no gain. The IRS also says the loss can't be deducted. Sell a personal item for more than you paid and the gain is taxable, reported on Form 8949 and Schedule D (IRS, What to do with Form 1099-K, reviewed July 27, 2026).

If a 1099-K includes personal items sold at a loss, don't pay tax on them and don't ignore the form. The IRS gives two ways to zero the amount out: enter it on the line at the top of the 2025 Schedule 1 (Form 1040) for personal items sold at a loss, or report the sales on Form 8949.

Keep personal sales and resale inventory apart from the start. Clearing out your closet isn't the same activity as buying stock to flip, and mixed records make both harder to prove later.

Is reselling a hobby or a business?

Reselling is a business when you do it to make a profit, and that's judged by how you operate, not by what you call it. The IRS lists factors it weighs and says no single one decides (IRS Tax Tip 2022-57). Buying inventory to sell at a profit, and keeping records while you do it, points strongly toward a business.

IRS hobby-or-business factors and what they look like in reselling. Source: IRS Tax Tip 2022-57, April 13, 2022.
IRS factorWhat it looks like in reselling
Run in a businesslike manner, with complete and accurate booksA separate account, a purchase log, sales reports kept
Time and effort put in to make it profitableA regular sourcing and listing routine
You depend on the incomeThe money pays household bills
You change methods to improve profitYou drop categories that don't sell and test new ones
You have the knowledge to run it as a businessYou check sold prices before you buy
Profit in some years, and how muchThe activity makes money, or has a real path to it
Personal motives such as enjoymentPoints the other way if the buying is mostly for fun

Tax law also presumes a profit motive once an activity makes a profit in 3 or more of 5 consecutive years (26 U.S.C. 183(d)).

The label changes the math. A business reports on Schedule C, deducts its ordinary and necessary expenses, and pays self-employment tax on the profit. Hobby income goes on line 8j of the 2025 Schedule 1. For hobbies, IRS Publication 525 (2025) says expense deductions "can't total more than the income you report from the activity and can be taken only if you itemize deductions," and that hobby losses aren't deductible from other income.

What is self-employment tax on reselling profit?

Self-employment tax is Social Security and Medicare for people who work for themselves. The rate is 15.3%, made of 12.4% for Social Security and 2.9% for Medicare, and it applies to 92.35% of your net profit (IRS; Schedule SE, 2025). That comes to about 14.1% of profit, before any income tax.

Two limits apply. You owe none if 92.35% of your profit comes to less than $400. And the 12.4% part stops at the Social Security wage base, $184,500 for 2026 (IRS Publication 15, 2026). Half of the tax is deducted on Schedule 1, which trims your income tax a little. The self-employment tax calculator runs these lines on your own 2026 figures.

Budget for self-employment tax as well as income tax. Quarterly estimated taxes for resellers shows the 2026 dates and how much of each payout to set aside.

What should you do first?

The first job for a new reseller is records, not forms. What you set up in the first month decides how hard April is: one account for the business, a purchase log, a mileage log and a tax savings account. The five steps below are in order.

  1. Open a separate bank account for the business and run every sale and inventory purchase through it.
  2. Record each purchase on the day you buy it: date, source, item, price. That's your cost of goods sold, often a reseller's biggest deduction.
  3. Keep a mileage log in the car for sourcing trips and post office runs (what the log needs, and the 2026 rates).
  4. Move a share of every payout into a savings account you don't spend from.
  5. Book a CPA or enrolled agent in your first profitable year. Getting inventory accounting wrong for several years costs more than the fee.
Do I have to pay taxes on reselling income?
Yes, on the profit. The IRS says income from goods you sell must be reported whether or not you get a Form 1099-K. You're taxed on net profit after cost of goods sold and business expenses, not on gross sales.
Do I owe tax if I didn't get a 1099-K?
The form doesn't decide it. For 2025 and 2026, platforms have to send one only above $20,000 in payments and 200 transactions. Profit below that line is still reportable income.
Is selling my own used clothes taxable?
Not if you sold them for less than you paid, which is normal for used clothes. The loss can't be deducted. If a 1099-K includes those sales, the IRS says to zero them out on the line at the top of Schedule 1 or on Form 8949.
How do I know if my reselling is a business or a hobby?
The IRS weighs factors such as whether you run it like a business with accurate records, the time you put in, whether you depend on the income and your profit history. Tax law presumes a profit motive after a profit in 3 of 5 consecutive years.
What is self-employment tax for resellers?
Social Security and Medicare for the self-employed: 15.3% of 92.35% of net profit, about 14.1% of profit. None is due if that base is under $400, and the 12.4% part stops at $184,500 of earnings for 2026.

Disclosure We build FlowLister and publish Reseller Taxes. FlowLister writes eBay listings from item photos, with a price taken from sold listings, and for a reseller that listing becomes part of the record of what sold. It's AI, so it misses things. It doesn't prepare taxes or keep books, and nothing on this site is tax advice.

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