How Much Can You Sell on eBay Without Paying Taxes?

There is no sales-volume ceiling that keeps eBay income tax-free. Federal income tax applies to profit, so how much you can sell on eBay without paying taxes depends on whether you are actually making money on what you sell. Clearing out used household goods for less than you originally paid produces no taxable income, and you can do that in any dollar amount. Selling something for more than you paid produces a taxable gain from the first dollar of profit, even if your total sales are small. A separate question — whether eBay reports your activity to the IRS on Form 1099-K — has its own threshold: more than $20,000 in gross payments and more than 200 transactions in the same calendar year.¹

Selling Used Personal Items at a Loss

Most casual sellers fall into this category, and they owe nothing. If you bought a treadmill for $800 and sell it on eBay for $200, you have no taxable income. You took a $600 loss, but because the treadmill was a personal-use item, that loss is not deductible either.² The IRS treats nearly everything you own for personal use as a capital asset, and losses on personal-use capital assets are simply nondeductible.³

Used clothing, electronics, furniture, and similar household goods almost always sell for less than you paid. There is no cap on how many of those you can sell without tax consequences. What matters is being able to show what you originally paid, so hold on to receipts, credit card statements, or anything else that documents your purchase price.

When an eBay Sale Actually Produces Taxable Income

You owe tax when the sale price is higher than your cost basis in the item. Cost basis is usually what you paid, but there are two important variations.

Gains on Personal Items

If you sell a personal item for more than you paid, the difference is a taxable capital gain. A handbag bought for $300 that sells for $500 produces a $200 gain, reported on Schedule D and Form 8949 for the year of the sale.

Collectibles Are Taxed at a Higher Rate

Coins, stamps, artwork, antiques, rugs, metals, gems, and alcoholic beverages are collectibles under IRS rules.⁴ If you hold a collectible for more than a year and sell it at a profit, the gain is taxed at a maximum rate of 28%, higher than the usual long-term capital gains rates of 0%, 15%, or 20%.² Held a year or less, the gain is taxed as ordinary income. In either case, you subtract your cost basis and selling expenses first; the 28% ceiling applies only to the net gain.

Inherited Items

If you sell something you inherited, your cost basis is generally the item’s fair market value on the date of the original owner’s death, not what they paid for it.⁵ If a relative paid $20 for a painting decades ago and it was worth $500 when they died, your basis is $500. Selling it for $550 produces only a $50 gain.

Gifted Items

Items you received as gifts generally carry the original owner’s cost basis for purposes of calculating a gain. If your aunt paid $100 for a necklace and gave it to you, your basis is $100, and selling it for $250 means tax on $150.⁶ If the fair market value at the time of the gift was lower than the donor’s basis, your basis for calculating a loss is that lower fair market value instead.

When eBay Sends a 1099-K

eBay is a third-party settlement organization under federal tax law, which means it must file Form 1099-K with the IRS for sellers who cross certain thresholds. The One, Big, Beautiful Bill Act, signed into law on July 4, 2025, permanently repealed the temporary $600 rule and restored the original threshold: $20,000 in gross payments and more than 200 transactions in a calendar year.¹ Both conditions must be met before eBay is required to send you or the IRS a 1099-K.⁷

A few states impose lower reporting thresholds of their own, so you may still receive a state-level 1099-K even if your federal sales fall below the line. Check your state’s tax agency for details.

The 1099-K is a data-matching tool for the IRS, not a trigger for tax liability. Whether or not you receive one, you are legally required to report any income you earn from eBay sales. And receiving a 1099-K does not mean the whole gross amount is taxable; it reports gross payments before fees, refunds, and your cost of goods.

Hobby or Business: What Changes If You Do Profit

Once you are earning genuine profit, the IRS distinguishes casual hobby sellers from those operating with a profit motive. The distinction is governed by the tax code’s rules on activities not engaged in for profit and determines what you can deduct against your income.⁸

Factors the IRS weighs include how often you sell, whether you keep business-like records, the time and effort you invest, and whether you depend on the income. If your activity shows a profit in at least three of the past five tax years, the IRS presumes you are running a business, and the burden shifts to the government to prove otherwise.⁸

Hobby Sellers

Under the Tax Cuts and Jobs Act, hobby-related expenses are not deductible. That means a hobby seller reports the full sale price on Schedule 1 of Form 1040 without subtracting the item’s cost, eBay fees, or shipping.⁹ Items sold at a loss still produce no taxable gain, so the rule only bites when you sell for more than you paid but had costs eating into that gain.

Business Sellers

Business sellers report income and expenses on Schedule C and can deduct the cost of goods sold, eBay fees, shipping, packaging, and other operational expenses.¹⁰ eBay final value fees run 2.5% to 15.3% of the total sale amount depending on category, plus a per-order fee of $0.30 or $0.40.¹¹ If your home is the only fixed location of your business, you can also deduct a portion of home expenses for space used regularly to store inventory.¹²

The trade-off is self-employment tax. If your Schedule C net profit is $400 or more, you must file Schedule SE and pay 15.3% self-employment tax on top of income tax (12.4% Social Security and 2.9% Medicare).¹³ You can deduct half of the self-employment tax paid when calculating adjusted gross income.¹⁴

Estimated Tax Payments

If you expect to owe $1,000 or more in federal tax for the year, including self-employment tax, you generally need to make quarterly estimated payments instead of waiting until you file.¹⁵ The four 2026 deadlines are April 15, June 15, September 15, and January 15, 2027. You can skip the January payment if you file your 2026 return by February 1, 2027, and pay the full balance then.¹⁶

To avoid an underpayment penalty, pay at least 90% of the tax you owe for the current year or 100% of the tax shown on your prior-year return, whichever is less. If your adjusted gross income exceeded $150,000 in the prior year ($75,000 if married filing separately), the prior-year safe harbor rises to 110%.¹⁷

Sales Tax Is a Separate Obligation

Sales tax has nothing to do with income tax. eBay currently collects and remits sales tax on behalf of sellers in 46 jurisdictions under marketplace facilitator laws.¹⁸ Buyers pay it at checkout, eBay forwards it to the state, and the amount is not part of your income. You only need to handle sales tax yourself if you sell outside a marketplace platform and cross a state’s economic nexus threshold, commonly $100,000 in sales or 200 transactions within that state.

Records You Should Keep

Whether you owe tax or not, records are what you rely on if the IRS ever questions your return.

Proof of cost basis: original purchase receipts, credit card statements, or appraisals for inherited and gifted items.
eBay transaction data: the Seller Hub offers downloadable reports showing each sale, price, and fees withheld.
Shipping records: postage receipts, carrier invoices, and packaging supply costs.
Refund records: refunded sales reduce your gross receipts.

If you receive a 1099-K, reconcile the gross amount against your own records. The form reports gross payments before fees and refunds, so it will be higher than what you actually netted.

Penalties for Not Reporting

Skipping eBay income you actually owe tax on can trigger two separate penalties. The failure-to-file penalty is 5% of the unpaid tax for each month the return is late, up to 25%.¹⁹ The failure-to-pay penalty is a separate 0.5% of the unpaid tax per month, also capped at 25%.²⁰ Both accrue interest and can run at the same time. Filing on time, even without paying the full balance, avoids the steeper failure-to-file charge.

1
Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill
2
Internal Revenue Service. Topic No. 409, Capital Gains and Losses
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Internal Revenue Service. Investments in Collectibles in Individually Directed Qualified Plan Accounts
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Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent
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Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gifts and Transfers in Trust
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Office of the Law Revision Counsel. 26 USC 6050W – Returns Relating to Payments Made in Settlement of Payment Card and Third Party Network Transactions
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Office of the Law Revision Counsel. 26 USC 183 – Activities Not Engaged in for Profit
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Internal Revenue Service. How to Tell the Difference Between a Hobby and a Business for Tax Purposes
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eBay. Seller Fees
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Internal Revenue Service. Topic No. 554, Self-Employment Tax
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Internal Revenue Service. Estimated Taxes
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Internal Revenue Service. Form 1040-ES (2026)
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eBay Seller Center. Tax Information
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Internal Revenue Service. Failure to Pay Penalty