WASHINGTON, D.C. – The One, Big, Beautiful Bill repeals a burdensome tax reporting requirement perpetrated by Democrats during their reign over Washington and provides additional tax and paperwork relief to small businesses and workers. Under the so-called American Rescue Plan Act (ARPA), Democrats made changes to the existing Internal Revenue Service (IRS) 1099-K tax reporting rule to impose reporting requirements on Americans using third-party payment apps like Venmo and PayPal for transactions as low as $600. According to the Joint Committee on Taxation, filers making less than $200,000 would bear over 90 percent of this tax burden. The One, Big, Beautiful Bill stops this Democrat attack on America’s gig economy by repealing the ARPA 1099-K rule.

But the bill also goes a step further to reduce the paperwork burden on small businesses and workers by increasing the 1099-MISC reporting threshold for payments by a business for services performed by an independent contractor or subcontractor from $600 to $2,000. This would remove the need for more than one third of all 1099-MISC paperwork.

Ways and Means Committee Chairman Jason Smith (MO-08) said:

“When they controlled all of Washington, Democrats went out of their way to make life harder for hard-working Americans. They increased taxes and imposed undue paperwork burdens on gig workers. In a tacit acknowledgement that this new rule was a serious problem for low- and middle-income tax filers, the Biden Administration repeatedly – and illegally – delayed implementation of the policy throughout its time in office. Over 90 percent of the tax burden of this provision falls on Americans earning less than $200,000.

“The One, Big, Beautiful Bill is restoring sanity in the tax code with these changes while bringing additional relief to small businesses who need to spend more time figuring out how to grow their business and invest in their employees and less time filling out IRS paperwork. The current IRS subcontract labor reporting requirements are as out-of-date as they come. Increasing the threshold at which small businesses have to file a form with the IRS will be a potent regulatory relief for Main Street.”

During a Ways and Means Committee field hearing in Georgia last Congress, Alison Couch, a small business owner who runs a tax and business service firm, testified to how the current IRS reporting requirement for small businesses has not been increased above the current $600 threshold in decades, saying “the burden of the reporting requirement that this places on small business owners is great. The IRS adjusts tax brackets, credit limits, mileage rates, and exclusion amounts every year – this hasn’t been adjusted in at least 25 years.”

FACT SHEET: The One, Big, Beautiful Bill Fuels America’s Economic Growth