Seller Tax Guide
eBay Taxes: What Every Seller Needs to Know
How you're taxed on eBay depends on whether you're cleaning out your closet or running a resale business. eBay doesn't withhold taxes, and the 1099-K it may send reports gross sales, not profit. Here's how eBay taxes work once you're selling as a business.
How eBay taxes work
You're a self-employed seller
The marketplace doesn't withhold taxes. If you sell as a business (regularly and for profit), you owe income tax plus self-employment tax on your net profit — what's left after the cost of the goods and your selling expenses.
Self-employment tax is 15.3%
That's 12.4% Social Security + 2.9% Medicare on your net earnings — on top of regular income tax. It funds the benefits an employer would normally split with you.
Deductions lower your taxable income
Business expenses — equipment, software, supplies, and phone — reduce the net earnings you're taxed on. Tracked properly, they often save more than any other single move.
You pay as you go, quarterly
Instead of one April bill, the IRS expects estimated payments four times a year. Paying quarterly avoids an underpayment penalty.
Do you get a 1099-K — and is your eBay income taxable?
eBay processes buyer payments, so it issues a Form 1099-K when your sales reach the IRS reporting threshold for the year. That threshold has changed in recent years, so you might receive a 1099-K for modest sales — or not get one and still owe tax. The 1099-K shows gross sales before fees, shipping, and refunds, so it isn't your taxable profit.
Whether you owe tax depends on what you're doing. Selling your own used personal items for less than you paid is generally not taxable (and the loss isn't deductible). But buying items to resell for profit is a business: you report it on Schedule C, deduct your cost of goods and expenses, and owe income tax plus the 15.3% self-employment tax on the net profit. Confirm your situation with the IRS.
What eBay sellers can deduct
Cost of goods sold (COGS)
What you paid for the items you resold is subtracted from your sales as COGS — keep receipts and records of each item's cost.
eBay & payment fees
eBay's final-value fees, listing fees, and payment-processing fees are deductible business expenses.
Shipping & postage
Postage, labels, and carrier fees you pay to ship orders (the portion not reimbursed by the buyer).
Packaging & supplies
Boxes, mailers, tape, and packing materials used to ship orders.
Home office & storage
The part of your home used regularly and exclusively to store inventory or run the business may qualify.
Sourcing & drop-off mileage
Miles driven to source inventory or drop off shipments are deductible at the IRS standard mileage rate.
Frequently asked questions
Does eBay take out taxes for me?
No. eBay doesn't withhold taxes. If you sell as a business, you owe income tax plus the 15.3% self-employment tax on your net profit (sales minus cost of goods and expenses).
Do I get a 1099-K from eBay?
eBay issues a 1099-K when your sales reach the IRS reporting threshold for the year (the threshold has changed recently). It reports gross sales before fees and shipping — report all of your business income whether or not a form arrives.
Is selling on eBay taxable income?
Reselling for profit is a taxable business reported on Schedule C. Selling your own used belongings for less than you paid generally isn't taxable, and that loss isn't deductible. A 1099-K alone doesn't make income taxable — but you must report and reconcile it. Confirm with the IRS.
What can eBay sellers deduct?
Your cost of goods sold (what you paid for the items), eBay and payment fees, shipping and packaging, a qualifying home office or storage space, and sourcing mileage. Records of each item's cost are essential.
How much should eBay sellers set aside for taxes?
A common rule of thumb is 25–30% of your net profit (sales minus cost of goods and expenses) for income tax plus the 15.3% self-employment tax — your exact rate depends on your total income and state. Use the Tax Set-Aside calculator for a tailored number.
Authoritative IRS resources
Free calculators for eBay sellers
Stop guessing what you owe
UnifyOne tracks your online reselling earnings, expenses, and tax set-aside automatically — so quarterly taxes are never a surprise.
This guide is educational information, not tax advice. Tax rules, thresholds, and the IRS standard mileage rate change yearly — confirm current figures with the IRS or a qualified tax professional for your situation.