The One, Big, Beautiful Bill: What gig economy workers should know

FS-2026-07, March 2026

Certain provisions in the One, Big, Beautiful Bill signed into law on July 4, 2025, lessen the tax burden for gig economy workers. By making certain business deductions permanent, the new law allows gig workers to keep more of what they’ve earned.

New for gig economy workers

• No tax on tips deduction

  A new deduction allows eligible gig economy workers to deduct up to $25,000 in qualified tips ($25,000 per return for single filers and married couples filing jointly) from their taxable income from tax year 2025 through 2028. The IRS issued proposed regulations with a list of nearly 70 separate occupations of tipped workers that qualify for the deduction and is currently working on the finalized list. Self-employed workers may deduct qualified tips up to the amount of their net income from the trades or businesses in which the qualified tips were received. For self-employed workers, tips must be reported on Form 1099-MISC, 1099-NEC, or 1099-K to be eligible for the deduction. These forms will not separately identify qualified tip amounts for 2025, but the tip amount must still be included in the total amounts reported on these forms in order for the tip to be eligible for the deduction.

• Permanent Qualified Business Income deduction

  The deduction is now permanent, allowing eligible gig workers to plan long term to maximize the benefit. Certain tip income may be excluded when computing QBI.

• Form 1099-K and the increased reporting threshold

  The OBBB retroactively reverted the reporting threshold for payments made by third party settlement organizations such as payment apps and online marketplaces to the thresholds in place prior to the American Rescue Plan Act. Third party settlement organizations are required to issue a Form 1099-K to the IRS and the payee if the amount of payments made during the calendar year is more than $20,000, and the total number of transactions is more than 200. Taxpayers must report all income when they file their tax return regardless of whether they receive a Form 1099-K or other information return.

• Bonus depreciation

  The law allows 100% bonus depreciation on certain assets acquired after Jan. 19, 2025. This allows gig workers who buy certain qualifying property solely for use in their business, such as vehicles or certain computers, to deduct up to the full cost of the business use percentage (must be over 50% of total use) in the first year of use in the business.

• For more information visit the One, Big, Beautiful Bill Provisions on IRS.gov.