The gig economy — from rideshare drivers to freelance designers — continues to grow, but so does scrutiny from lawmakers and tax authorities. In 2025, new rules are changing how income is reported, how workers are classified, and how taxes are collected.
IRS Reporting Changes
Beginning in 2025, platforms like Uber, DoorDash, and Etsy are required to issue Form 1099-K to workers earning more than $5,000 through their platforms. This threshold is higher than the initially proposed $600 (which sparked concern among casual sellers), but lower than the prior $20,000 threshold.
Worker Classification
Several states are passing or revising laws to clarify whether gig workers are employees or independent contractors. Employee classification would mean access to benefits and labor protections, but it would also require businesses to pay payroll taxes and comply with labor laws.
Impact on Gig Workers
Freelancers must keep careful track of income and expenses, since platforms now report more earnings directly to the IRS. Deductions for mileage, home offices, and equipment are more important than ever to reduce taxable income.
Impact on Platforms
Companies that rely on flexible labor models face higher compliance costs. They may need to adapt hiring models, provide more documentation, and in some cases reclassify large portions of their workforce.
The Bigger Picture
The growth of the gig economy has blurred traditional lines between employment and self-employment. While lawmakers seek to balance innovation with worker protection, the result is a shifting legal environment that both freelancers and businesses must navigate carefully.
