What Is the De Minimis Threshold? Customs, Fringe Benefits, and 1099s

A de minimis threshold is the dollar amount below which the government treats a transaction, benefit, or payment as too small to tax, collect duty on, or report. The phrase comes from a Latin maxim meaning the law does not concern itself with trifles, and it shows up in three places most people encounter: customs duties on imported goods, the tax treatment of small workplace perks, and the paperwork rules for 1099 forms. The specific numbers matter because falling above or below the line changes whether you owe duty, whether an employer must add a benefit to your W-2, or whether a business must send an information return to the IRS. Several of these thresholds shifted in 2025 and 2026, so old figures can steer you wrong.

Why the Threshold Exists

Regulators set numeric cutoffs so they can focus enforcement where it pays off. Inspecting every $15 package or tracking every cup of office coffee would cost more than any revenue collected. The dollar amounts reflect a working judgment about where administrative cost starts to exceed the tax or duty at stake, and those lines move as trade volumes, technology, and policy priorities change. Courts apply the same logic when they dismiss claims over microscopic violations — a rounding error, a trivial setback deviation, a few seconds of background music — on the ground that the harm is too small to warrant a remedy.

The $800 Customs Threshold Has Been Suspended

Under 19 U.S.C. § 1321, the United States historically allowed goods valued at $800 or less to enter duty-free and tax-free. The statute measures the limit by the “aggregate fair retail value in the country of shipment” for articles imported by one person on one day.¹ This provision, commonly called Section 321, is what made low-value international e-commerce work: a package under $800 cleared customs with minimal paperwork and no duty.

That exemption no longer applies. An executive order effective August 29, 2025 suspended duty-free de minimis treatment for shipments from all countries, and a February 2026 order continued and expanded the suspension. Every import that previously qualified is now subject to applicable duties, taxes, and fees regardless of value, country of origin, or shipping method.²³

How Packages Are Treated Now

Non-postal shipments arriving through commercial carriers such as FedEx, UPS, or DHL must be filed using a formal entry type in the Automated Commercial Environment and pay all applicable duties and fees. Simplified low-value declarations are gone for these carriers.⁴

Postal shipments follow a separate track. They are subject to duties based on the tariff rate applicable to the country of origin, and the February 2026 order ties the duty to a temporary import surcharge rate assessed on the declared value of each dutiable item.³ Donations and informational materials remain exempt under a separate federal statute.⁴

Splitting one order into multiple shipments to get under a value line has always been prohibited. The statute revokes the exemption for merchandise from a single order forwarded in separate lots, and anyone who enters goods in violation of customs law using Section 321 faces civil penalties of up to $5,000 for a first offense and up to $10,000 for each subsequent violation, on top of other penalties.¹

Employee Fringe Benefits: Small Perks and the $100 Ceiling

Internal Revenue Code Section 132(e) defines a “de minimis fringe” as any property or service whose value is so small that tracking it for tax purposes would be unreasonable or administratively impractical.⁵ A qualifying benefit is excluded from the employee’s gross income entirely: no W-2 reporting, no withholding, no tax owed.

The IRS treats these as typical examples:

Occasional snacks, coffee, and doughnuts
Holiday gifts of low value
Occasional tickets to entertainment events
Flowers or books provided under special circumstances
Group-term life insurance for an employee’s spouse or dependent with a face value of $2,000 or less
Personal use of an employer-provided cell phone when the phone was given primarily for business reasons

The IRS has ruled that items worth more than $100 generally cannot qualify as de minimis, even in unusual circumstances.⁶

Frequency Counts Alongside Value

A perk that would be de minimis as a one-time event can become taxable if offered routinely. Treasury regulations measure frequency per employee, not across the whole workforce. If one worker receives a free meal every day and no one else does, those meals are taxable for that worker even though the company-wide frequency is low.⁷ Occasional meal money or local transportation fare qualifies only when tied to overtime that extends the normal schedule, and only when actually occasional.

Cash and Gift Cards Never Qualify

This is where employers trip most often. Cash and cash-equivalent items are never excludable as de minimis fringe benefits, regardless of amount. A $10 Starbucks card is taxable. A $25 Visa card is taxable. The IRS reasoning: cash functions as a wage, and there is no administrative burden to accounting for it.⁶

A narrow exception exists for certificates redeemable for a specific item of personal property that is minimal in value, provided infrequently, and impractical to track — a certificate for a specific ham from a specific store at the holidays, for instance. Gift certificates redeemable for general merchandise or with cash-equivalent value do not qualify.⁶

Income Reporting Thresholds for 1099 Forms

Separate dollar lines control when a business must file an information return with the IRS. These thresholds reduce paperwork on small transactions. They do not reduce anyone’s tax obligation.

Form 1099-NEC: Nonemployee Compensation

For tax years beginning after 2025, the reporting threshold for information returns like the 1099-NEC rose from $600 to $2,000, with inflation adjustments starting in 2027.⁸ A business that pays a contractor less than $2,000 during 2026 generally does not need to file a 1099-NEC for that contractor. The $600 figure many people still quote has been in place for decades and is now out of date.

Form 1099-INT: Interest Income

Banks and financial institutions must issue a Form 1099-INT to anyone who earned at least $10 in interest during the year. A higher $600 threshold applies to interest paid in the course of a trade or business that falls outside standard bank-interest categories. Any amount of interest triggers a 1099-INT if federal income tax was withheld under backup withholding rules.⁹

Form 1099-K: Payment Apps and Marketplaces

Payment apps and online marketplaces report transactions on Form 1099-K only when a seller receives more than $20,000 in payments across more than 200 transactions during the calendar year. Both conditions must be met. Personal payments like splitting dinner, repaying a friend for rent, or sending a birthday gift are not payments for goods or services and should not trigger a 1099-K. The IRS suggests tagging those transactions as non-business in your payment app where the option exists.¹⁰

No Form Does Not Mean No Tax

Reporting thresholds tell payers when to send a form. They do not tell recipients when they owe tax. Federal law defines gross income as “all income from whatever source derived,” and the obligation to report it exists whether or not any 1099 lands in your mailbox.¹¹ Freelance work worth $1,500 in 2026 falls below the new 1099-NEC threshold, so the payer files nothing. You still owe income tax on the $1,500 and still have to report it.

Skipping that report can be expensive. The failure-to-pay penalty runs at 0.5% of the unpaid tax for each month the balance remains outstanding, capping at 25%. The failure-to-file penalty is heavier at 5% per month, also capping at 25%.¹² Interest accrues on top of both at the federal short-term rate plus three percentage points.

1
Office of the Law Revision Counsel. 19 USC 1321 – Administrative Exemptions
2
The White House. Suspending Duty-Free De Minimis Treatment for All Countries
3
The White House. Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries
4
U.S. Customs and Border Protection. Factsheet: Suspension of Duty-Free De Minimis Treatment
5
Office of the Law Revision Counsel. 26 USC 132 – Certain Fringe Benefits
6
Internal Revenue Service. De Minimis Fringe Benefits
7
eCFR. 26 CFR 1.132-6 – De Minimis Fringes
8
Internal Revenue Service. Publication 1099 (2026)
9
Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID
10
Internal Revenue Service. Understanding Your Form 1099-K
11
Office of the Law Revision Counsel. 26 USC 61 – Gross Income Defined
12
Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax