Do Resellers Pay Taxes? A Quick Guide to eBay, StockX, and More

The short answer is yes, almost certainly. The longer answer depends on what you’re selling and why.

The IRS draws a distinction between three types of sellers. Occasional personal sellers are people who clear out the garage every few years, selling used items for less than they paid. That activity is generally not taxable because you’re taking a loss on personal property, not generating profit. If you sold your old couch for $80 and paid $300 for it five years ago, you don’t owe anything on that sale.

Hobby sellers occupy the middle ground. If you’re selling items for profit but doing it casually without real business intent, the IRS considers that a hobby. Hobby income is taxable, but the rules around it are less favorable than business income. You have to report what you made, but since 2018 you can’t deduct most related expenses to offset that income, which means you could end up paying taxes on a larger number than your actual take-home.

A Form 1099-K is a tax document that platforms like eBay, StockX, and Mercari are required to send you (and the IRS) when your sales meet certain thresholds. The important thing to understand is that receiving a 1099-K doesn’t automatically mean you owe taxes on the full amount it shows. It reports gross payments, not profit. Your actual taxable income is what’s left after subtracting what you paid for the inventory and your allowable business expenses.

The other critical point: you’re legally required to report your resale income even if you don’t receive a 1099-K. The form is the platform’s reporting obligation; your reporting obligation exists independently of it.

The 1099-K threshold has changed multiple times in the last few years and caused enormous confusion. Here’s where things stand now.

Prior to 2022, the federal threshold was $20,000 in gross payments and more than 200 transactions. The American Rescue Plan Act of 2021 was supposed to drop that to $600 with no transaction minimum starting in 2023, but the IRS delayed implementation repeatedly due to the chaos it would have caused for casual sellers. For 2024, the threshold settled at $5,000 with no transaction minimum as a phase-in measure.

Then, in July 2025, Congress passed legislation that permanently restored the threshold to the original $20,000 and 200 transactions standard. That means for tax year 2025, you’ll only receive a federal 1099-K if you exceed both of those numbers on a given platform. The $600 threshold that had been planned for 2026 is no longer happening at the federal level.

A few states have set their own lower reporting thresholds that are stricter than the federal standard. As of 2025, states including Arkansas, Illinois, Maryland, Massachusetts, Montana, New Jersey, Vermont, and Virginia have lower thresholds, and platforms are required to send you a 1099-K if you meet those state minimums even if you don’t hit the federal numbers. If you live in one of these states, check your state’s Department of Revenue website for the specific threshold that applies to you.

State income tax on your reselling profits is a separate question from the 1099-K threshold. Every state with an income tax expects you to report business income regardless of whether you received a form.

This is where operating as a business rather than a hobby pays off. If you’re reporting your reselling income on Schedule C, you can reduce your taxable income by deducting legitimate business expenses. That means you’re only paying taxes on your actual profit, not your total revenue.

Common deductions for resellers include inventory costs, which is simply what you paid for the items you sold. eBay and platform fees are deductible, and eBay’s annual tax summary in your Seller Hub will show you exactly what you paid in fees for the year. Shipping costs and packing materials count. If you use a phone, computer, or internet service for your reselling operation, a proportional share of those bills is deductible.

Mileage is one that many resellers miss. If you drive to source inventory or meet up for a sale, those miles may be deductible. For 2025, the IRS standard mileage rate is 70 cents per mile. You don’t need gas receipts for this; you just need to keep a mileage log with the date, destination, and purpose of the trip.

If you have a dedicated space in your home used exclusively for your reselling business, whether that’s a room where you photograph and store inventory or a workspace where you pack orders, you may be able to deduct a portion of your rent or mortgage as a home office expense.

While smart deductions can significantly reduce your tax bill, they are subject to specific regulations. If you attempt to claim a car maintenance bill as a business expense just because you also use it to take packages to the post office, you might catch unwanted attention. Be smart, and reach out to a qualified tax professional when in doubt, especially if you’re claiming deductions for a home office or devices you use for reselling and in your personal life.

When you work a regular job, your employer withholds taxes from each paycheck so you’re not hit with a massive bill in April. When you’re self-employed, that doesn’t happen automatically. You’re responsible for paying estimated taxes four times a year, and if you don’t, the IRS will charge penalties on top of what you owe.

The rule of thumb: if you expect to owe more than $1,000 in taxes for the year, you should be making quarterly estimated payments. The due dates are typically mid-April, mid-June, mid-September, and mid-January. A simple way to avoid underpaying is to set aside 25 to 30 percent of every sale’s profit into a separate account throughout the year and use that to make your quarterly payments.

The type of eBay account you use doesn’t change your tax obligations. Whether you’re selling under a personal or business account, if you’re generating profit from intentional reselling activity, that income is taxable and should be reported on Schedule C. The account type doesn’t tell the IRS whether you’re a business; your activity and intent do.

That said, opening a dedicated business seller account on eBay does make record-keeping easier. You’ll have cleaner separation between personal and business transactions, which makes both bookkeeping and potential audits simpler to navigate.

For most beginner resellers, an LLC doesn’t change your tax situation much. A single-member LLC is treated as a “disregarded entity” by the IRS, meaning it’s taxed exactly the same as a sole proprietorship. Your reselling income still flows onto Schedule C of your personal return, and you still pay self-employment tax on the profits. The LLC doesn’t create a separate tax bill or reduce what you owe federally.

Where an LLC does help is on the liability side. If a buyer sues you or you end up with a debt related to your business, the LLC creates a legal separation between your business and your personal assets. For resellers just starting out, that protection is probably not urgent. As your operation grows and the dollar amounts get larger, it starts to matter more.

The tax rules for your income are the same regardless of which platform you use, since profit is profit. What varies is when each platform will send you a 1099-K.

StockX follows the same federal threshold as eBay: $20,000 in gross sales and more than 200 transactions for tax year 2025. State thresholds may be lower. StockX processes payouts through Hyperwallet, so you’ll need to input your tax information there once you approach the threshold, or your payouts will be held until you do.

Facebook Marketplace is handled through Meta Pay. The same $20,000 and 200 transaction federal threshold applies, though if you’re getting paid through PayPal for Marketplace transactions, that platform may generate its own 1099-K independently. Cash transactions through Marketplace are not reported to the IRS at all, which is one reason it’s popular for high-value local sales, though you’re still legally required to report those profits as income.

Mercari and OfferUp follow the same federal 1099-K threshold. There’s nothing meaningfully different about how income from these platforms is taxed versus eBay. The main practical difference is that eBay’s built-in Seller Hub tools make it easier to pull your annual numbers than some of the smaller platforms, where you may need to export and calculate manually.

One thing worth noting: the 1099-K amounts reported across these platforms reflect gross payments, not what you actually received after fees. If eBay shows $30,000 on your 1099-K but you paid $3,900 in fees, your taxable revenue starts at $30,000 and then comes down once you subtract fees and other deductions on Schedule C. Don’t panic at the gross number.

The single most important thing you can do for your taxes as a reseller is keep records throughout the year instead of trying to reconstruct everything in April. At minimum, track what you paid for each item, what it sold for, any shipping costs, and platform fees. Even a basic spreadsheet works. The goal is to be able to show the IRS the cost basis for every item you sold, because that’s how you prove your profit number rather than your gross revenue.

Save receipts from any sourcing trips, trade shows, or supply purchases. Keep a simple mileage log. If you use software to manage listings or accounting, that’s deductible too.

If you’re pulling in meaningful money and the bookkeeping feels overwhelming, it’s worth spending a few hundred dollars on a CPA who works with e-commerce sellers. They’ll almost certainly find deductions that offset their fee, and they can give you guidance specific to your state’s rules.

Reselling income is taxable, and the IRS expects you to report it whether or not anyone sends you a form. The 2025 threshold for receiving a 1099-K is back to $20,000 and 200 transactions federally, but that number has nothing to do with what you actually owe. If you’re buying and selling inventory with the intent to profit, you’re running a business, and you should file accordingly on Schedule C.

The upside of treating it like a business is that you get to deduct your costs, which can significantly reduce your tax bill. Keep good records, set aside money for quarterly payments, and when in doubt, talk to a tax professional. This article is general education, not legal or tax advice, and the rules are specific enough to your situation that professional guidance is worth it once you’re generating consistent income.