eBay seller taxes: income tax, 1099-K and sales tax

eBay is used both by businesses and by people clearing out their homes, and the tax answer is very different for each. This guide explains how eBay sales are taxed, what eBay reports and collects, and how to record sales and fees.

By Muhammad Bilal, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. Checked against official sources on . 2 minute read.

Short answer

eBay seller taxes are based on profit from selling, not on gross sales. eBay collects and remits sales tax on orders to states with a sales tax, as a marketplace facilitator. eBay issues Form 1099-K when federal thresholds, over $20,000 and 200 transactions, or lower state thresholds are met. Selling personal items for less than you paid is not taxable profit.

At a glance

Taxed on
Profit, not gross sales
Sales tax on eBay orders
Collected and remitted by eBay
Form 1099-K
Over $20,000 and over 200 transactions, or lower state thresholds
Personal items sold at a loss
Not taxable profit
Business sellers
Schedule C and self-employment tax
Deductible
eBay fees, shipping, cost of goods sold
eBay seller taxes: income tax, 1099-K and sales taxTaxed on: Profit, not gross sales; Sales tax on eBay orders: Collected and remitted by eBay; Form 1099-K: Over $20,000 and over 200 transactions, or lower state thresholds; Personal items sold at a loss: Not taxable profit; Business sellers: Schedule C and self-employment tax; Deductible: eBay fees, shipping, cost of goods sold.KEY FACTS AT A GLANCEeBay seller taxes: income tax, 1099-K and salestaxTaxed onProfit, not gross salesSales tax on eBay ordersCollected and remitted byeBayForm 1099-KOver $20,000 and over 200transactions, or lowerstate thresholdsPersonal items sold at a lossNot taxable profitBusiness sellersSchedule C andself-employment taxDeductibleeBay fees, shipping, costof goods soldChecked against official sourcesTax BakerseBay seller taxes: income tax, 1099-K and sales taxTaxed on: Profit, not gross sales; Sales tax on eBay orders: Collected and remitted by eBay; Form 1099-K: Over $20,000 and over 200 transactions, or lower state thresholds; Personal items sold at a loss: Not taxable profit; Business sellers: Schedule C and self-employment tax; Deductible: eBay fees, shipping, cost of goods sold.KEY FACTS AT A GLANCEeBay seller taxes: income tax,1099-K and sales taxTaxed onProfit, not gross salesSales tax on eBay ordersCollected and remitted by eBayForm 1099-KOver $20,000 and over 200 transactions, orlower state thresholdsPersonal items sold at a lossNot taxable profitBusiness sellersSchedule C and self-employment taxDeductibleeBay fees, shipping, cost of goods soldChecked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

Are you a business seller or selling personal items?

Selling personal itemsBusiness seller
ExampleYour own used clothes, furniture or electronicsBuying goods to resell, or making products to sell
Sold for less than you paidNo taxable gain, and the loss is not deductibleA business loss, deductible
Sold for more than you paidA capital gain, taxableBusiness income
Where reportedForm 1040, following the instructions for personal itemsSchedule C
Self-employment taxNoYes, on profit

When does eBay send a Form 1099-K?

eBay reports sellers' gross payments to the IRS on Form 1099-K when payments are over $20,000 and there are over 200 transactions in the year, the federal threshold. Some states require forms at lower amounts. The 1099-K shows gross sales before fees, refunds and shipping costs. See Form 1099-K.

How do business sellers work out profit?

  • Gross sales, including shipping charged to buyers.
  • Minus refunds and returns.
  • Minus cost of goods sold: what you paid for the items you sold, including freight in. See how inventory works for marketplace sellers.
  • Minus eBay fees, promoted listing fees, shipping labels, packaging and other expenses.

Use eBay's annual reports for sales and fees, and your purchase records for cost of goods.

Who handles sales tax?

eBay collects and remits sales tax on orders shipped to states with a sales tax, under marketplace facilitator laws. You do not collect it on eBay orders. Sales through your own website or other channels are a different matter. See how US sales tax works.

Do eBay sellers pay self-employment tax?

Business sellers do, on net profit of $400 or more. See self-employment tax explained.

What records should you keep?

  • eBay transaction and payout reports.
  • Purchase receipts for inventory.
  • For personal items, evidence of what you originally paid, in case a 1099-K arrives.

A monthly routine is set out in bookkeeping for eBay sellers.

Selling on eBay?

We reconcile your eBay reports to your books and any 1099-K, account for fees and cost of goods, and prepare your return.

Book a call Chat on WhatsApp

Questions people ask

Do I pay taxes on eBay sales?

Business sellers pay tax on their profit. Selling personal items for less than you paid is not taxable.

When will eBay send me a 1099-K?

When payments to you are over $20,000 and over 200 transactions in the year, or at lower amounts where a state requires it.

Does eBay collect sales tax for me?

Yes, on orders shipped to states with a sales tax, under marketplace facilitator laws.

Are eBay fees tax deductible?

For business sellers, yes, as business expenses on Schedule C.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IRS: Understanding your Form 1099-K
  2. IRS: About Schedule C (Form 1040)
  3. Streamlined Sales Tax Governing Board: Marketplace facilitator state guidance

Rules and fees change. If you are reading this long after September 30, 2026, confirm the figures with the source before you rely on them.

Federal tax formsForm 1099-K: what it shows and how to report itOnline sellersAmazon FBA taxes: everything a seller has to fileSales tax basicsHow US sales tax works: a guide for small businesses

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This guide is general information. It is not tax or legal advice for your situation.