2026 · Etsy
Etsy taxes: what you owe and when a form comes
Etsy sends a 1099-K once you cross the federal threshold. But your profit is taxable well before that.
How Etsy reports your income
The 1099-K reports the GROSS total buyers paid into your Payment account, no fees, refunds, or discounts subtracted (Etsy uses the IRS gross definition).
Fees, shipping labels, and materials are deductible against the gross on Schedule C, the 1099-K number is your revenue, not your profit.
Total the platform processed, before fees.
Sales minus fees, materials, shipping.
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The three layers for Etsy income
| Income tax | On profit from $1, no tax-free floor |
| Self-employment tax | Once net profit hits $400 |
| 1099-K form | Over 20,000 AND 200+ transactions (federal) |
Underneath sits the hobby-vs-business question, which decides whether you can deduct your Etsy costs.
Questions about Etsy income
Do I have to pay taxes on Etsy income?
Yes, your Etsy profit is taxable from the first dollar, whether or not you get a form. A 1099-K only arrives once you pass the federal threshold (over $20,000 and more than 200 transactions), but the tax applies below it too.
Will Etsy send me a 1099-K?
The 1099-K reports the GROSS total buyers paid into your Payment account, no fees, refunds, or discounts subtracted (Etsy uses the IRS gross definition). You'll get a 1099-K once you're over the federal threshold, $20,000 and 200+ transactions in 2026. Fees, shipping labels, and materials are deductible against the gross on Schedule C, the 1099-K number is your revenue, not your profit.
How much should I set aside from Etsy earnings?
On a $6,000 profit example, the estimate is about $850 in total tax ($848 of it self-employment tax), roughly 14% of profit. Run your own numbers below.
Related
An estimate for 2026. Federal figures from the IRS; Etsy reporting behavior can change, confirm with the platform. Nothing stored. Not tax advice.