If you sell sports cards and make a profit, that profit is taxable income — full stop. The IRS doesn't make exceptions for hobbies, and eBay's 1099-K reporting means your sales figures are visible to the government whether you report them or not.
This guide covers the tax basics every card seller needs to understand: what you owe, when you owe it, what you can deduct, and how tracking your transactions correctly can save you significant money at tax time.
Sports card profits are taxable income. eBay and other platforms report your gross sales to the IRS via 1099-K once you hit the threshold. You're taxed on profit — sales minus your cost of goods and deductible expenses — not gross revenue. But you need purchase records to prove your cost basis. Hobby sellers can't deduct losses; business sellers can deduct expenses and losses against income.
This article is for general educational purposes only. It is not tax advice. Tax rules vary by state and individual situation — consult a qualified tax professional for guidance specific to your situation.
The $600 Rule and eBay 1099-Ks
Starting with 2023 tax year filings, the IRS lowered the 1099-K reporting threshold to $600 in gross sales (though implementation has been phased in — check the current IRS guidance for the exact threshold in effect for 2026). This means eBay, PayPal, Venmo, and other payment processors send the IRS a 1099-K form showing your total gross receipts once you cross the threshold.
Important: the 1099-K reports gross sales, not profit. If you sold $10,000 worth of cards that cost you $8,500 to acquire, your gross on the 1099-K is $10,000 — but your taxable income is only the $1,500 difference (minus deductible expenses). You need records to prove that.
You are taxed on profit, not gross sales. But you need documentation of your cost basis to prove your profit figure to the IRS. Without records, you owe taxes on the full gross amount.
Hobby Income vs. Business Income
How your card selling is classified changes the tax treatment significantly:
Hobby Classification
If the IRS determines your selling is a hobby (not a business), you must report all income but cannot deduct losses or expenses beyond the income generated. Hobby losses cannot offset other income. The IRS considers factors like profit motive, consistency, and how businesslike your record-keeping is to determine this classification.
Business Classification
If you operate as a business (sole proprietor, LLC, etc.), you can deduct business expenses against your income — including shipping supplies, grading fees, storage, platform subscription fees, and a portion of your home office if applicable. You also file a Schedule C and are subject to self-employment tax (~15.3%) on net profit, but the deduction flexibility is substantial.
| Factor | Hobby | Business |
|---|---|---|
| Report income | Yes | Yes |
| Deduct expenses | Limited | Yes (Schedule C) |
| Deduct losses vs. other income | No | Yes |
| Self-employment tax | No | Yes (~15.3%) |
| Record-keeping required | Yes | Yes (more rigorous) |
If you're selling consistently with a profit motive, establishing yourself as a business and keeping rigorous records is usually the more favorable tax position — even accounting for self-employment tax.
What You Can Deduct as a Card Seller
As a business seller, deductible expenses include:
- Cost of goods sold (COGS) — What you paid for the cards you sold. This is your single biggest deduction.
- Shipping and packaging — Postage, bubble mailers, top loaders, team bags, boxes.
- Grading fees — PSA, BGS, CGC submission fees and shipping to/from graders.
- Platform fees — eBay, COMC, and other selling platform fees.
- Seller tools and software — Subscription tools like HobbyMetrics that help you manage your business.
- Card storage — Binders, storage boxes, display cases purchased for business inventory.
- Home office — If you have a dedicated space used exclusively for your card business, a proportional deduction may apply.
- Mileage — Driving to card shows, the post office, and other business-related trips at the IRS standard mileage rate.
Capital Gains vs. Ordinary Income
The tax rate you pay on card profits depends on how you're classified:
Collectors who buy and hold cards as investments may be subject to collectibles capital gains tax — currently up to 28% on long-term gains (held more than one year), which is higher than the standard long-term capital gains rate for most assets.
Dealers/business sellers who regularly buy and sell cards for profit pay ordinary income tax rates on profits (the same rates as wages), plus self-employment tax. This is generally the right framework for active flippers and sellers.
The Importance of Cost Basis Records
Your cost basis — what you paid for a card — is what reduces your taxable income. Without documentation, the IRS can tax your full gross receipts. Cost basis documentation should include:
- Date of purchase
- Purchase price (including buyer's premium at auction, if applicable)
- Source (eBay order number, card show receipt, private sale note)
- Any improvement costs (grading fees add to cost basis)
A spreadsheet works. Dedicated software is better. The key is that your records can clearly tie each card sold to what you paid for it.
Estimated Quarterly Taxes
If you expect to owe more than $1,000 in taxes for the year from card selling, the IRS requires you to pay estimated quarterly taxes — due in April, June, September, and January. Failing to pay quarterly can result in an underpayment penalty, even if you pay everything by April 15.
A common approach: set aside 25–30% of every net profit as it comes in. Pay quarterly. Adjust based on your actual tax rate once you file.
Track Your Card Business Like a Pro
HobbyMetrics logs every sale, fee, and cost — giving you the clean P&L records you need at tax time. No more piecing together a year's worth of eBay history in April.
Start Free →Frequently Asked Questions
Yes. Profit from selling sports cards is taxable income regardless of whether you receive a 1099-K. If you bought a card for $50 and sold it for $150, that $100 gain is taxable. The 1099-K threshold determines whether platforms automatically report your gross sales to the IRS — but you owe taxes either way.
The IRS lowered the 1099-K reporting threshold to $600 in gross sales. This means eBay sends the IRS a form showing your total receipts once you cross that amount. The form reports gross sales, not profit — so you still need purchase records to show your actual taxable income and avoid being taxed on revenue instead of gains.
Yes, if you operate as a business rather than a hobby. Deductible expenses include eBay fees, PayPal/payment fees, shipping supplies, grading fees, storage costs, and platform subscription fees. Hobby sellers cannot deduct expenses beyond the hobby income generated.
The IRS applies a profit-motive test. If you sell consistently, keep records, and intend to profit, you're likely a business. If you primarily collect and occasionally sell, you may be classified as a hobby. Business status is generally more favorable for active sellers — but comes with self-employment tax obligations.