Do You Need to Pay Taxes on Reselling Clothes? 2026 Guide

Casual seller vs. business seller: what's the difference?

The IRS treats casual sellers and business sellers differently. Which category you fall into determines whether you owe taxes:

Most people selling clothes from their own closet are casual sellers. If you bought a jacket for $200 and sell it for $60, you sold at a loss — no tax owed. If you buy a jacket at a thrift store for $10 and sell it for $80, that $70 profit is taxable income.

When you do and don't owe taxes

Here are common scenarios and whether they trigger a tax obligation:

Receiving a 1099-K does not automatically mean you owe taxes. It means the IRS has been notified of your gross sales, and you need to account for them on your return — even if the net result is zero tax owed.

The $600 reporting threshold (1099-K)

Starting in 2024, payment platforms must report sellers who receive $600 or more in gross payments to the IRS. Previously, the threshold was $20,000 and 200 transactions. This change affects every major resale platform:

The $600 threshold applies per platform. If you sell $400 on eBay and $300 on Poshmark, neither will issue a 1099-K. If you sell $700 on eBay, eBay will report it.

What expenses can resellers deduct?

If you resell as a business (buying to sell at a profit), you can deduct business expenses to reduce your taxable income. Common deductions include:

Keep every receipt. The IRS requires documentation for all business deductions. Use a dedicated spreadsheet or accounting app to track purchases, sales, and expenses throughout the year.

Record keeping for resellers

Good records are the difference between paying the right amount of tax and overpaying. Track these for every transaction:

1. Purchase price and date — Save thrift store receipts. For personal items you're selling, note the original retail price and approximate purchase date.
2. Selling price and platform — Record the gross sale amount, platform fees deducted, and net payout.
3. Shipping costs — Track postage costs for each sale, whether paid by you or the buyer.
4. Mileage log — Record date, destination, and miles driven for every sourcing trip and post office run. Apps like MileIQ automate this.
5. Supply receipts — Packaging materials, printer ink, and other supplies add up. Keep receipts or bank statements as proof.

Most platforms provide annual sales summaries. Download these in January and cross-reference with your own records before filing.

What casual sellers need to know

If you're just selling clothes from your own closet (not buying to resell), keep these points in mind:

1. You probably don't owe taxes — Most personal clothing sells for less than the original purchase price. Selling a $150 dress for $40 is a $110 loss, not income.
2. You may still get a 1099-K — If your total sales on any platform exceed $600, you'll receive one. This doesn't mean you owe tax — you just need to report the sales and show they were at a loss.
3. Keep proof of original prices — Receipts, credit card statements, or even screenshots of the original retail price help document that you sold at a loss.
4. Report accurately — If you receive a 1099-K, report the gross amount on your tax return and offset it with your cost basis (original purchase price) to show no profit.